Prices trade within a narrow range as market assumes price floor

Prices continued to trade within a narrow range, close to multi-year lows on Wednesday. A morning retest of psychological resistance at 65p/therm was once again rejected, with contracts shedding value into the close.

Little interruption to Norwegian supply logged over the past couple of weeks no doubt served as a price ceiling, though some unplanned works in the UK reduced injection capacity and local storage levels are significantly lower than the same time last year.

All in all, the market appears to have found a price floor for the time being, though any shift in the fragile supply and demand balance or negative assessments of Ukraine-Russia peace prospect both risk an upward correction.

A similarly bearish session for the baseload power curve as wind generation strengthened even further. According to data from Elexon, wind output ticked up higher to an average of 21.2GW on Wednesday, comprising 55.4% of the GB power mix. Gas-fired (CCGT) power rose slightly to 5.5GW (13.8%) following a drop in imports from mainland Europe but still remained greatly supressed by high renewables.

Small losses on the carbon market likely served as a secondary source of pressure, data from ICE shows that the Carbon EUA benchmark contract eased off by 0.5% after an apparent attempt to retest the contracts yearly high lost steam.

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Price commentary courtesy of Crown Gas and Power