Prices swing higher amid developments in Middle East
Gas prices swung higher on Friday in an apparent retest of Tuesdays highs that resulted in the front Summer and Winter contracts posting gains of circa 10p/therm and 14p/therm, respectively.
Developments in the Middle East continued to feed significant risk premium into the NBP curve.
Market participants remain concerned that continued strikes across the region could lead more producers to declare Force Majeure, providing further support to prices.
Both sides in the ongoing US/Israel–Iran conflict have targeted critical energy infrastructure, and installations in Israel, Saudi Arabia, Qatar, Bahrain, Iraq, and the UAE were hit last week following a series of widespread Iranian retaliatory strikes.
A further decline in wind power generation increased pressure in the short term on Friday, with strength on natural gas and oil markets serving as a prime source of support for contracts further out.
According to data from Elexon, wind output fell to just 4.5GW on Friday, down sharply from 10.5GW on Thursday.
As a result, gas became the largest component of the generation mix at 16.5GW (46.6%), marking a notable decline in renewable output compared with the previous week.
Gas and power markets have resumed their upward trajectory this morning, with both being offered significantly above Friday’s close at time of writing.
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Price commentary courtesy of Crown Gas and Power 