Prices stuggle to establish clear direction amid high levels of volatility

NBP gas prices pulled back from two and a half month highs on Wednesday as the market struggled to establish a clear direction, contributing to volatile price action.

Uncertainty regarding US involvement in the Israel-Iran conflict, along with fears that oil and gas cargoes via the Strait of Hormuz provided firm underlying support, limiting downside.

A gradual recovery in Norwegian output following a brief period of elevated planned maintenance, alongside consistently below average system demand likely weighed on the near-curve.

The latest run of our 14-day model indicates that demand will hold just below average until at least 2nd July.

On the power front, the baseload power curve decoupled slightly from its gas counterpart on Thursday, with small gains posted further out amid lingering concerns regarding French nuclear plants.

The latest NESO week-ahead generation forecast (18-24 June) projects that average daytime and overnight (minimum) solar generation will increase by circa 8.5% versus the previous 7 days, though wind could see lower-lows, possibly increasing the frequency in which more expensive gas, biomass and hydro plants have to be brought online to balance out low renewable power.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power