Forecasts for lower wind generation

Prompt prices had increased from the get-go

Having opened with sharp gains on Monday, both the NBP prompt and futures markets fell back late in the session retracing the majority of the day’s gains.  Prompt prices had increased from the get-go as concerns of surging demand for LNG in Asia could inflate prices further while supplies are tight in Europe for the summer.  Natural gas imports from Norway are already constrained due to maintenance while an unplanned outage at the Karsto plant could further restrict supplies for the short term.  Storage gas reserves are below 25% of capacity and well below the levels in stock for this time last year.  Meanwhile GB gas demand is expected to increase later today to compensate for a fall in wind generation in the power stack.

  Baseload power futures in the UK continued to be driven by the gains in the NBP curve

Baseload power futures in the UK continued to be driven by the gains in the NBP curve yesterday.  As in the gas market, the early increases were partially reversed late in the session and contracts settled with a wide spread of gains.  The front month closed at £78.10/MWh up £0.35/MWh while the front winter contract was almost a pound higher at £86.35/MWh. Forecasts for lower wind generation from later today supported the already buoyed the power prompt on Monday.  Wind generation is expected to fall from yesterday’s levels of 5.1GW and ease to the weekend. The baseload product for the day ahead closed £3.07/MWh higher

Crude oil prices settled higher on Monday

Crude oil prices settled higher on Monday after the dollar weakened and Iranian nuclear talks stalled.  Brent gained $1.39 a barrel yesterday while the U.S. benchmark closed $2.02 a barrel higher after the dollar fell back following last week’s rally due to the Fed hinting that interest rate hikes could come sooner than originally expected. Nuclear talks with Iran will take a break following the results in the Iranian Presidential election at the weekend and some analysts believe sanctions are less likely to be lifted following the election of hardliner Ebrahim Raisi.

 Prompt prices have opened higher as a result in the systems shortfall

Gas demand has increased to 140MCM for today and supplies are lagging by 8MCM.  LNG send out is just 26MCM, leaving storage withdrawals to ramp up to 22MCM as Norwegian imports are nominated at 39MCM for today. Prompt prices have opened higher as a result in the systems shortfall, the day ahead last traded at 75.75p, up 1.30p.  On the curve, futures are exchanging over a penny up on last’s close with July at 73.89p.  In contrast, crude oil prices have retreated off morning highs and are in negative territory with declines of around 40 cents per barrel with Brent last trading at $74.50 a barrel.