Strong supply fundamentals helps reduce wholesale price

Despite edging higher on Friday, the market managed to close just south of the previous weekly close amid strong, underlying supply fundamentals.

Shipping data shows that 2 vessels, the Flex Vigilant and Emei, arrived at Milford Haven on Saturday, each laden with US volumes.

If cargoes continue to arrive at the pace that signals suggest, deliveries in November could, like October, eclipse the same period last year.

LNG is a key source of supply over winter months and steady supply growth, particularly in the US, is likely serving as a price ceiling for the near-curve.

Norwegian pipeline flows also continue at a strong pace despite reduced capacity at the Kårstø processing facility which reduced export capacity at a rate of 9.1mcm/day.

Forecasts of falling temperatures and lower winds for the week ahead, alongside strength on the European crude oil benchmark offered firm support to the power curve on Friday.

Lower wind across the week is likely to support demand for gas-fired generation, coinciding with elevated heating related demand for both gas and power, with daily lows below zero expected over the next few days.

Furthermore, according to data from ICE, the Brent Crude benchmark contract firmed 2.2% into the weekly close as damage to Russia’s major Ryazan oil refinery (due to a targeted Ukrainian strike) threatened to disrupt up to 5% of Russian refining capacity.

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Price commentary courtesy of Crown Gas and Power