Prices spike amid reports of another heatwave
Gas prices moved higher for the third consecutive session on Tuesday as the US-Iran Memorandum of Understanding, which stipulates a 60-day ceasefire continues to hold officially, despite targeted strikes from both sides over the weekend.
Reports that yet another heatwave could be moving towards Europe over the next few days likely offered significant support to the curve.
The recent ‘heat dome’ weather event put additional strain on the continents’ already strained storage reserves and limited nuclear power output in France curtailed export capacity for the British power sector.
With that said, an improving LNG supply outlook and steady Norwegian flows likely curbed upward momentum, serving as a price ceiling at the front-end of the curve.
A further decline in wind power supported baseload power prices on Tuesday. According to data from Elexon, wind output fell to an average of just 3.4GW, accounting for 10.6% of the generation mix.
This sharply contrasted with gas (CCGT) which surged to 14.7GW and 46.2% of the overall mix. This heavy reliance likely carried over more gas associated risk premium to the power market, and again this morning we see extremely low wind generation.
At time of writing, wind is outputting at a rate of just 0.56GW, accounting for just a fractional 1.7%.
This has prompted a huge increase in imports, with interconnectors accounting for around 21% of supply at time of writing.
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Price commentary courtesy of Crown Gas and Power 