Prices reach new highs as Ukraine peace efforts appear to do little
Tuesday’s NBP reversal proved short-lived, with January 27 and Summer 27 gaining 5.5p/therm (0.19p/kWh) and 6.8p/therm (0.23p/kWh) respectively on Wednesday, pushing the front season back towards the highest levels since January 2023.
Ukraine peace efforts appeared to do little to ease the considerable risk premium in the curve.
US envoy Steve Witkoff met Zelenskyy in Oslo on Tuesday and Putin in St Petersburg on Wednesday, and while Kyiv accepted a US proposal for renewed trilateral talks, Moscow agreed only in principle to resume them on or after 10th November, possibly in Abu Dhabi.
Markets may have seen this as a deferral rather than a breakthrough, given Kremlin reservations over the proposals and Kyiv’s dispute with Washington over restricted military Starlink access.
Chasing gas back towards long-term highs, baseload power recovered firmly on Wednesday after Tuesday’s brief pullback, despite a looser generation mix.
Wind output strengthened from 41.7% of the stack to 44.8%, while gas-fired generation eased from 26.1% to 20.3%, lifting renewables to 60.2%. The rebound was gas-led, as optimism over US–Iran mediation faded and Iran’s Revolutionary Guard claimed two tankers had been set ablaze by mines near Hormuz.
Some relief may come from the newly approved Jackdaw field, which the government expects to begin supplying gas by the end of this month.
At peak output of around 40,000 barrels of oil equivalent per day, Jackdaw is expected to lift domestic gas production by about 6%, covering just under 4% of Britain’s daily gas demand.
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Price commentary courtesy of Crown Gas and Power 