Weekly Market Update - Gas prices reach three week high before retreating once again

Sales Trader, Yulia Zhizhaeva, reports on energy market activity, covering the period 25th – 31st July 2023. On our end-of-day pricing tool, The Source, we published an in-week high of £ 123.25/MWh for the Winter-23 seasonal power price on 25th July. In this blog, Yulia shares the market news and updates from the last week.

Following a period of low prices, European gas recovered last Tuesday, reaching a 2-week high on the back of concerns of further Norwegian outages and declining LNG deliveries, as competition with Asian buyers ramps up ahead of winter. UK power followed the trend, pushed by higher gas and carbon trading. Meanwhile, N2EX day ahead baseload contracts cleared fairly flat, as low wind conditions remain unchanged.

Into the week, European gas prices increased further, hitting a 3-week high before retreating. However, due to high storage levels, the well-supplied system added downward pressure, despite the upcoming planned Norwegian outages and no further LNG deliveries to the UK in July. The UK power curve remained quiet, with interest focused on the front month, quarter and season, and, as wind generation was expected to pick up, the N2EX day ahead baseload cleared £6/MWh lower.

On Friday, we saw further losses on the gas curve as LNG send-out remained flat and demand was unchanged, seeing August-23 NBP lose 23ppth over the past three days. August power contracts also traded lower, with the main focus on Winter-23 and Summer-24 seasonal products, with only 15MW trading beyond Summer-24.

This week, as future contracts for front-month delivery expired, gas firmed up, although fundamentals remain bearish. UK power traded higher amidst extremely low liquidity, however, gains were limited by a downside correction on carbon emissions. The N2EX day ahead base cleared £7/MWh higher on strong day ahead NBP gas and expectations of reduced wind generation.