Last Friday, NBP (National Balancing Point) gas prices decreased slightly due to strong wind generation, a weak broader energy mix, and Hurricane Beryl now active in crucial parts of America. This resulted in market depreciation of around 1.2p/therm (0.04p/kWh) across most curve contracts compared with their previous close. Gas prices have remained within a narrow trading range over the last few weeks.
What does this mean?
Increased wind power generation massively reduced gas-fired demand. Even though it dropped the previous day, wind power output remained above average at 9.5GW. According to National Grid, wind power met 33.5% of the total British power demand.
Also, the broader energy complex contributed to the market decline, experiencing day-on-day losses. The Intercontinental Exchange (ICE) reported a 1% decline in Brent crude oil and a 2.5% drop in the Rotterdam coal benchmark.
Hurricane Beryl which caused major damage to parts of the Caribbean last week, has moved onto Texas. Although the hurricane was deemed a tropical storm a few days ago, it has increased to a Category 2 storm, posing a threat to Texas’ gas and oil industries. However, as a precautionary measure, Freeport LNG (in Texas) shut for the weekend, and remains offline with no indication when it will be up and running.
Summary
NBP (National Balancing Point) gas prices rose this Monday, with the Winter 24 contract up 1p/therm (0.034p/kWh) above its previous settlement. This is most likely a result of wind generation returning to normal and Freeport LNG remaining offline as it waits for Hurricane Beryl to pass through.
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