NBP edges lower amid revisions to near dated demand forecasts

NBP prices edged lower on Wednesday amid downward revisions to near-term demand forecasts and a steady stream of LNG arrivals.

Our latest 14-day model indicates that demand has slipped slightly below seasonal norms, holding as such until 22nd January, offering much-needed relief after the recent cold snap.

Storage levels in both the UK and the continent are significantly lower than at the same time last year, leaving the market more exposed to short-term supply side disruption and building risk premium into the curve.

Perceived political instability in Iran stemming from large scale protests contributed to gains of 10.9% on the European crude oil benchmark, serving as underlying support for natural gas due to loose price correlation of the two fossil fuels.

Mixed movement observed across the baseload power curve, with summer contracts observing small gains, perhaps supported by gas storage concerns, due to the major role that gas-fired power plays in the European generation mix.

Sharp gains on crude oil and carbon benchmarks continued to serve as a price floor for power prices.

The Carbon EUA bull run entered its seventh consecutive day, testing highs not seen since June 2023 and supporting the cost of fossil fuel generation.

Wind generation declined further yesterday, with gas serving as the largest source of power at 15.3GW (38.9% of the mix).

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Price commentary courtesy of Crown Gas and Power