Gas and power prices surged across Europe on Monday

Prompt prices at the NBP finished over 12.00p higher

Gas and power prices surged across Europe on Monday as the relentless bull run continued to drive prices to new record highs.  Maintenance works on Norwegian natural gas supplies to Europe via Zeebrugge meant much of the increased flows to the UK yesterday were bound for Europe through the Balgzand Bacton Line interconnector. Fresh rumours that the Nord Stream 2 pipeline, a new under-sea connection from Russia to Germany, will not see gas flows until next year also drove the near curve higher yesterday.  Adding to the melting pot this week are forecasts for low wind generation in the GB power stack, which means gas demand will likely tick up to compensate. Prompt prices at the NBP finished over 12.00p higher on the day with near curve contracts up by an average of 7.75p.

 Concerns of a tight power grid in the UK were heightened

Concerns of a tight power grid in the UK were heightened on Monday and baseload power for the day ahead settled at £517.52/MWh setting a new record for the contract.  Apart from forecasts for low wind generation this week very little else has changed although planned maintenance on the interconnector to France which will halve capacity for the remainder of the week.  Baseload futures also racked up considerable gains on the day with average increases for the front of the curve at £12.00/MWh.  The front month, October, settled at £146.45/MWh up £9.55/MWh.

  U.S. supply concerns provided the main driver to crude oil prices

U.S. supply concerns provided the main driver to crude oil prices yesterday as Brent added 59 cents a barrel while West Texas Intermediate gained 73 cents to close at $70.45 a barrel.  Some oil producers in the Gulf of Mexico remain shut in two weeks after the arrival of hurricane Ida, meanwhile refining activity in the area has recovered quicker leaving supplies lagging. There are warnings of further disruption in the area with the approach of tropical storm Nicholas.  Price gains on the day were curbed after OPEC reduced its global oil demand forecast for the final quarter to 99.7m barrels per day, citing the spread of the rampant Delta variant of the coronavirus as the reason for the 110,000 barrels per day reduction.

Gas prices at the NBP have opened with sharp increases

Gas prices at the NBP have opened with sharp increases again this morning as the front month on the curve traded to 165.00p.  Prompt prices have climbed by around 6.50p in early exchanges with the day ahead last trading at 160.00p.  The GB gas demand for the day is forecast at 154MCM and supplies are forecast 10MCM short according to the National Grid. Langeled flows are down to just 25MCM this morning with total Norwegian nominations to the UK for today at 42MCM.  Crude oil prices have ticked up with both benchmarks around 35 cents per barrel higher.