Price maintain upward trajectory printing fresh multi-year highs
The NBP maintained it’s upward trajectory on Friday, printing fresh multi-year highs as attacks on shipping across the Middle East continued to mount.
The UK Maritime Trade Operations agency (UKMTO) said on Friday that October had already become its busiest month for reported attacks in the Strait of Hormuz since March, with at least 10 vessels hit in the area over the past week.
Renewed Russian strikes on Ukraine’s energy infrastructure further underpinned geopolitical risk premia across European gas markets, with waves of drone attacks damaging facilities in six regions on Friday, days after strikes on Kyiv’s three main power stations and despite a US-announced “energy ceasefire”.
Bullish sentiment remains strong this morning, with the Summer 27 front-season contract currently being offered circa 4p/therm (0.14p/kWh) above its previous settlement, at time of writing.
Taking its cue from gas, baseload power climbed on Friday, supported by a sharp drop in wind generation. Wind’s share of the stack fell from 45.0% to 34.1%, with gas-fired generation rising from 22.5% to 25.4% and peaking above 35% in the early hours.
Higher biomass and nuclear output cushioned the shortfall, but renewables still slipped from 59.8% to 54.0%. Wind rebounded to above 50% by late evening, sharply cutting gas-fired power demand.
According to the latest run of our 14-day demand model, wind is expected to recover from Wednesday, holding at higher levels until at least the end of October.
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Price commentary courtesy of Crown Gas and Power 