Prices continue to rise amid conflict in Middle East
Wholesale gas prices climbed for a fifth consecutive day at the NBP on Tuesday as conflict in the Middle East continued to spook energy global energy markets.
Access to the Strait of Hormuz seems to be a key point of concern in relation to gas supplies. Israeli strikes close to the strait, along with the risk that Iran could cut off access to the vital shipping passage, has the potential to halt LNG exports from Qatar, Oman and the United Arab Emirates which together account for a major share of global supplies of the fuel.
European demand for LNG is very strong due to a need to refill storage and keep up with cooling demand over the summer.
Baseload power prices continued to mirror the wider energy complex (mainly natural gas, oil and coal) and climb higher on Tuesday.
This is due to the significant share of fossil fuels in both the UK power mix and the rest of Europe. This comes amid continued investigations at several of EDF’s French nuclear reactors, which are raising concerns about France’s role as a net exporter of electricity over the rest of summer.
Temperatures across Europe are expected to hold above average over the next few days, serving as a secondary source of pressure for the curve, as operators may need to fire up additional gas, oil and coal plants to keep up with increased cooling demand in continental Europe.
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Price commentary courtesy of Crown Gas and Power 