Drop in renewable generation pressures already depleted gas storage levels

Volatility settled at the NBP on Thursday, as the Summer 26 front-season contract drifted 1.3p/therm back below a key psychological level to close at 149.15p/therm (5.1p/kWh).

The US has repeatedly asserted this week that its strategy regarding the Iran conflict will shift toward economic rather than military measures.

Next week, the US Treasury Secretary is expected to announce an array of “one-two punch” sanctions aimed at forcing Iran’s capitulation in the war, which has been ongoing since 28th February.

Market sentiment toward recent developments in the conflict remains mixed, though some view this pivot toward economic measures as a positive sign for regional energy supply flows.

The market has opened in positive territory this morning, with Winter 26 currently being offered circa 3p/therm (0.1p/kWh) above its previous settlement.

The power generation sector has been characterised by weaker renewable output so far this week, which alongside a bullish wider energy complex, has provided underlying support to the baseload near-curve.

According to data from Elexon, wind generation across Monday-Thursday averaged at a rate of just 4.4GW, almost half the output measured over the same days last week (8.4GW).

This prompted gas-fired (CCGT) demand to increase by around 43% over the same period, putting additional strain on supplies amidst the regional heatwave and further complicating efforts to refill continental storage to a safer level.

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Price commentary courtesy of Crown Gas and Power