Forecast of milder temperatures helps reduce prices

Weakening demand in the UK and milder temperatures across the continent helped to weigh on Gas prices at the NBP on Tuesday.

Contracts across the curve extended their decline, holding at five-week lows.

The front-season Summer 26 contract saw some of the steepest movement, losing roughly 1 p/th (0.034 p/kWh) when compared to its previous settlement. Near dated prices seemingly remain highly sensitive to shifts in weather.

The latest Crown Gas and Power 14-day forecast indicates that demand is set to fall below seasonal norms from Friday and stay suppressed through week 9 and into week 10.

Furthermore, milder temperatures across Europe played further into the bearish sentiment.

Recent forecast show that temperatures across the continent could lift around 7°C above seasonal averages in some countries, potentially slowing gas withdrawals from the stunted EU storage.

On the power side, baseload contracts broadly mirrored the downward trend of their gas counterparts, though the moves were noticeably more restrained.

Carbon remains a key focus point for the UK power market, and Tuesday marked the first uptick in EUA prices in over a week. ICE data shows that futures posted modest day on day gains of around 1€/tonne.

However, stronger renewable output perhaps helped cap any upward momentum on power contracts.

National Grid data indicates that solar generation rose by roughly 13.5% compared with the previous session, adding further weight to the bearish sentiment.

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Price commentary courtesy of Crown Gas and Power