Another volatile day at the NBP as results of mid term US elections are reported
Tuesday marked another volatile day at the NBP with near-curve contracts collapsing early in the afternoon before staging at least two determined recoveries, though not enough to recoup the full extent of the sell-off.
Key winter contracts such as December 26 and January 27 ultimately settled far lower day-on-day, with both falling by more than 9p/therm (0.3p/kWh).
The Summer 27 front-season contract carved out a two-week low after shedding circa 9.2p/therm (0.31p/kWh) on the day, according to ICE data.
Tuesday was also polling day for the US midterm elections, which market participants have linked to the outlook for the US-Iran conflict.
Views on what a Republican or Democratic majority could mean for the conflict are sharply divided, which may go some way to explaining the volatility seen over the past few days.
Falling sharply alongside gas, baseload power shrugged off a modestly tighter generation mix on Tuesday.
Wind output eased from 32.5% of the stack to 28.5%, while gas-fired generation rose from 34.3% to 39.7%, trimming renewables to 42.8%.
Losses came despite constrained nuclear availability, with Heysham 2’s Reactor 8 not due back until late November and both Heysham 2 Reactor 7 and Heysham 1 Reactor 2 running at reduced output.
The Crown Gas and Power model points to weaker wind over the weekend and colder conditions into next week, suggesting a tightening GB balance in the short term.
In the US midterm elections, Democrats are projected to have won control of both chambers of Congress, taking the House of Representatives and the Senate from the Republicans, according to major US media outlets.
Counting continues in several races, and the size of both majorities is not yet known.
The result brings divided government for the rest of Trump’s presidential term.
Democrats will control the legislative agenda and Senate confirmations, while the president keeps his executive powers, including over foreign policy.
How this shapes the US approach to Iran and the wider Persian Gulf remains to be seen.
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Price commentary courtesy of Crown Gas and Power 