Prices ease amid reduction in risk premium

A slight reversal was observed at the NBP on Wednesday, with curve contracts pulling back as some of the risk premium built up over the weekend subsided on account of no new major escalations between the US and Iran.

Steady North Sea flows helped ease pressure at the front-end; according to data from National Gas, UK and Norwegian offshore production accounted for more than 95% of supply.

This supported strong exports to mainland Europe, aiding with storage injections and leaving the British system significantly oversupplied throughout the session.

At the same time, the latest run of our 14-day model indicates that demand will trend slightly below seasonal norms until at least 15th July, reinforcing the short-term supply outlook.

A small recovery in wind output was observed across yesterday’s session, but renewables remained constrained overall.

CCGT (Combined-Cycle Gas Turbines) continued to serve as the largest source of generation in the GB power mix, imports came in a distant second, highlighting muted wind and solar contributions.

A year-on-year drop in nuclear capacity has enhanced demand for CCGT and imports over the past few months, however, the Sizewell B station is expected to come back online in mid-July after the conclusion of two months of planned maintenance, restoring 1.2GW of capacity.

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Price commentary courtesy of Crown Gas and Power