Iran war continues to prompt heightened market volatility

NBP gas prices eased off further on Wednesday, posting small losses for the fourth consecutive session.

The recent downward push has been cautious, with some of the risk premium associated with the Middle East conflict subsiding over recent days following signals that the US is willing to negotiate a peace settlement with Iran.

With that said, conflicting interpretations about the progress (and existence) of talks earlier in the week have likely curbed bearish sentiment.

The onset of seasonal maintenance in Europe’s largest supplier Norway, and slowing LNG deliveries are serving as emerging sources of risk moving into the summer supply season.

Shipping data indicates that, for the first time in 3 months, total LNG cargoes in March will lag below the same period last year, with heightened competition across Asian markets and the loss of Qatari production squeezing supply for the European market.

Short-term power market fundamentals were largely unchanged on Wednesday, although subtle shifts in the generation mix were observed.

A modest uptick in solar output contributed to further easing in gas-fired power demand, reinforcing the downward pressure already evident earlier in the week.

Wind generation also remained a dominant feature of the stack, lifting further to average 21.6GW (56.1% of the mix) over the session. In contrast, gas-fired output slipped to just 2.4GW (6.3%).

Both gas and power markets have opened firm this morning as continuous reporting on the Iran war continues to prompt heightened intraday volatility.

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