More increases as we rely on gas for power generation

A third consecutive day of gains saw NBP gas prices move higher again on Tuesday despite largely unchanged supply and demand fundamentals.

Norwegian flows remained firm following maintenance disruptions earlier this month, though nominations were down year-on-year – 64.5mcm versus 78.9mcm in 2024, minimal volumes have been received at the UK’s St Fergus terminal since the beginning of June.

While trending lower than last year, European storage levels have made up a substantial amount of ground and can now be considered well-stocked, reinforcing supply security ahead of winter and serving as a price ceiling for the near-curve, limiting further upside in the absence of fresh bullish drivers.

UK baseload power prices saw similar upside on Tuesday, supported by a sharp drop in wind generation to well-below average.

Wind output struggled to exceed 2GW for much of the day, increasing reliance on gas-fired generation and imports to meet demand.

This shift in the generation mix added upward pressure to prompt prices, despite relatively stable demand levels and comfortable system margins.

While broader fundamentals remain steady, the lack of renewable output highlights the market’s sensitivity to short-term supply fluctuations, particularly as the UK heads into the latter part of summer with intermittent weather patterns.

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Price commentary courtesy of Crown Gas and Power