Wholesale prices resume downward trend amid strong supply fundamentals

Prices at the NBP resumed a downward trend on Monday after an early bullish move quickly lost momentum.

The Summer 26 front-season contract ultimately closed around 1.8% lower than its previous settlement. Strong supply fundamentals offset lower year-on-year EU storage levels and stalling progress in peace talks between Russia and Ukraine.

According to data from Norwegian operator Gassco, only 8.6mcm was offline yesterday due to planned works and flow nominations into the UK’s Easington and St Fergus terminals totalled 75.5mcm, meeting circa 35% of system demand during the session.

LNG cargo arrivals have slowed slightly but remain stronger on the year, with a further 8 vessels signalling to arrive by 21st December, 7 of which are from the United States.

The baseload power curve resumed its downward trajectory on Monday amid strengthening wind output and softer natural gas prices.

Data from Elexon shows that wind power generation increased further to 17.3GW, comprising 48.1% of the GB power mix, and weighing heavily on gas-fired (CCGT) demand which fell to just 4.8GW (12.2%).

Wind is expected to remain strong over the next few days which may continue to suppress gas generation but any sudden dips or surges in renewable generation could lead to higher system balancing costs.

A small drop in nuclear generation vs last week may have contributed to higher imports (for balancing purposes) from the rest of the continent, predominately France.

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Price commentary courtesy of Crown Gas and Power