Strengthening wind output helps reduce wholesale prices
Strengthening wind output combined with a bearish wider energy complex helped reduce gas prices at the NBP on Tuesday.
Substantial losses were posted across the curve, with the Winter 24 front-season contract plunging more than 4.5p/therm (0.15p/kWh) to its lowest settlement since 25th July.
The recent drop in temperatures attributed to cooler arctic winds moving toward the UK has, at the same time, brought with it a strong recovery in wind power output over the past few days. According to data from National Grid, wind turbine generation averaged 15.3GW across Tuesday after rising rapidly from just 2.2GW on Saturday to 10.7GW on Monday. Wind power subsequently dominated the power mix yesterday with a 48.7% contribution to the generation stack (compared to just 14.3% for gas fired plants).
Further downside may have emerged from weakness across other energy markets. According to data from ICE the Brent Crude (Oil) and Carbon (EUA) benchmark contracts saw day-on-day losses of 3.7% and 2.4%, respectively.
In other news, Tropical Storm Francine was upgraded to a Category 1 Hurricane late on Tuesday, with winds in excess of 90mph being recorded as of this morning. The storm is set to make landfall across the coast of Louisiana late on Wednesday, bringing with it renewed risks to LNG and oil export infrastructure in the area.
This morning, gas prices have opened in similar territory when compared to their previous settlement, although many contracts have yet to trade at time of writing.
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Price commentary courtesy of Crown Gas and Power 