Last Friday, National Balancing Point (NBP) gas prices rose as a result of reduced Norwegian supply and lower wind power output. The most significant increase occurred across the near curve. The final September 24 front-month contracts closed around 1.1p/therm (0.04p/kWh) higher than its previous settlement.
What does this mean?
The delayed temporary closure of the Norway-UK Langeled interconnector drove the bullish front-end contracts. Offshore operator Gassco outlined that the Langeled pipeline has started its two-week maintenance as of Monday morning after gradually reducing flows over the weekend.
However, high storage levels in the UK are expected to mitigate the impact of the reduced supply from Norway. Ongoing maintenance of the IUK interconnector for British exports to Belgium will also help offset supply issues from Norway, provided there are no extended delays.
Also, lower wind power output may have contributed to the bullish sentiment in the market this week. National Grid data shows that wind turbine generation dropped by 36% compared to the previous gas day, making up just 11.5% of the power mix. On the other hand, gas-fired power generation (CCGT) accounted for over 34% during the same period.
Summary
This Monday, the October 24 front-month contract opened 1.5p/therm (0.05p/kWh) lower than its previous close. The significantly reduced supply from Norway and low wind power output created a bullish sentiment last week. The current bearish market sentiment may stem from wind generation returning to normal and ongoing high gas storage levels in Britain.
Click here to get your free, instant energy quote
↓
For more information on gas and energy for businesses, check out these websites:
