Short term supply issues keep wholesale prices high
Gas prices posted mixed movement at the NBP on Thursday, with the near curve edging higher, contrasting with drops across seasonal contracts.
Short term supply issues held prices in close proximity to two yearly highs. Weak storage levels and reduced EU import flexibility encouraged the same bullish sentiment we’ve seen as of late.
Below average continental storage levels continue to pressure the front-end, especially the Summer 25 front-season contract.
According to the latest data from Gas Infrastructure Europe, aggregated EU storage levels on 29th January stood at 54.65%, 16.3% below the same date last year and significantly below the 5 year moving average of 60.38%.
This is raising concerns about the blocs ability to reach its 90% mandated target by 1st November, with the absence of any Russian pipeline flows over the coming summer and predominantly below average winter temperatures greatly tightening supply and demand margins.
In other news, a Scottish court ruled on Thursday that the granting of consent by the UK Government (and Ofgem) between 2022 and 2023 for the development of the Rosebank oil and Jackdaw gas fields.
Each situated in different areas of the British North Sea the courts found that they were unlawful and halted production at the two assets.
Rosebank field is one of the largest untapped field within the UKCS (UK Continental Shelf) with reserves estimated at 300-500 million barrels of oil.
The incumbent Labour government will now have to revisit the previous administrations decisions before a conclusive answer can be given on the future of the fields.
The bulls show no signs of relenting this morning unfortunately, with the Summer 25 front-season contract currently being offered a further 2.5p/therm (0.085p/kWh) above its previous settlement at time of writing, slightly widening its premium over the following Winter 25 contract to around 10p/therm (0.34p/kWh).
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Price commentary courtesy of Crown Gas and Power 