Geopolitical pressure keeps Winter 26 contract prices at a high level

Geopolitical risk premium continued to keep the price for the Winter 26 front-season contract at a level (at 121p/therm) which hasn’t dropped below 110p/therm (3.75p/kWh) since 7th May.

This is in stark contrast to the price ceiling of around 80p/therm (2.73p/kWh) that we were seeing before the outbreak of the US-Iran conflict.

However, climbing Norwegian output is likely limiting upside potential for the near-curve.

According to offshore operator Gassco, pipeline flows into the UK’s Easington terminal are nominated at 46.3mcm for 3rd June, offering a much-needed buffer against upward revisions to short-term demand forecasts and slowing LNG imports.

Baseload power prices softened on Tuesday, though to a slightly lesser extent than was seen on the NBP.

Short-term variability in wind and gas demand forecasts could support balancing costs later this week, but so far this week wind held steady at around 21% of the mix, still trailing gas at ~33%, which remains the largest contributor.

Longer-term nuclear outages, including Reactor 1 at Torness, continue to tighten baseload supply.

In recent weeks, nuclear availability has been just over half that of the same period last year, increasing reliance on gas-fired generation.

However, this specific outage is expected to end on 17th June, easing some of the pressure on availability.

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Price commentary courtesy of Crown Gas and Power