Tomorrow’s US Mid-Term elections inflates risk premium

The market continued to whipsaw at the end of last week, with Summer 27 closing at the highest level of any front-season contract since early January 2023.

Risk premium has likely been inflated by concern over the US midterm elections and their perceived link to the US-Iran conflict.

Trump pledged on 8th October not to attack Iran before the vote, but last week said “anything’s possible” regarding strikes afterwards.

Polls open tomorrow, 3rd November, and enhanced volatility is possible in the run-up and on the day of the vote.

Meanwhile, the winter supply outlook remains unclear, with even slight forecast changes materially shifting sentiment. The Crown Gas and Power 14-day model shows demand averaging above seasonal norms until at least 15th November, as falling temperatures and lower winds tighten the system balance.

Rounding off an indecisive week, baseload power moved higher alongside gas on Friday.

Wind output recovered slightly from 14.5% of the stack to 21.8%, while gas-fired generation eased from 50.7% to 42.6%, lifting renewables to 38.7%.

Import support remains constrained, with the IFA interconnector between England and France capped at 500 MW in each direction until 13th November, while French nuclear outages are running at 15.1 GW, above year-ago levels.

The Crown Gas and Power forecast model shows wind briefly strengthening above 8 GW midweek before another lull from Friday, coinciding with the coldest conditions of the outlook.

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