Prices bounce back up amid higher gas fired demand

Gas prices bounced back up on Monday from more than 14-week lows amid reduced Norwegian supply and higher gas-fired power demand.

According to offshore operator Gassco, a compressor failure at Norway’s Ormen Lange field was cutting production by 10mcm/d per day from Monday morning.

This had a more bullish effect on NBP gas prices compared to other European hubs, since Ormen Lange exports most of its gas to the UK via the Nyhamna plant and Langeled pipeline.

As a result, gas imports from Norway to the UK dropped by 12.6% when compared to Friday. As a result, the British system was forecast to be 2.8mcm undersupplied as of the 3pm forecast from National Gas.

A sharp drop in wind power when compared to the Friday served as a primary source of further support for increases.

According to data from National Grid, wind generation fell from 10.4GW on Friday to just 4.9GW yesterday, prompting an 88% increase in gas-for-power output that coincided with tighter supplies due to the Ormen Lange outage.

French operator EDF also reported that it had to shut down its largest nuclear plant, Gravelines, due to an unusual incident in which, rather than the soaring temperatures the country is facing, a large swarm of jellyfish clogged and disabled the facilities cooling pumps, though the two factors are possibly interlinked.

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Price commentary courtesy of Crown Gas and Power