Gas prices in the UK are trading higher this morning than last night’s close.
The main drivers are a short gas system, below average temperatures and “optimistic sentiment” in the oil markets, according to npower’s daily market report.
Some cuts to Norwegian supply at Easington as well as reductions to field flows are contributing to the shortness in supply, said Sam Hill from the Optimisation Desk.
Langeled is flowing roughly 25mcm in line with nominations and Dutch flows from BBL are also lower at around 10mcm “as we compete with Europe for supply”.
The power market is however “slow to get trading this morning”.
Peak margins are set to be just under 12GW. Strong wind generation at 5GW is aiding this and also relieving some of the pressure on gas-fired power generation which is around 16GW, making up 47% of the stack.
Mr Hill added: “Yesterday we saw the Summer 17 power contracts push up, this is as we see some Aberthaw units set to zero from April 17, however they will be available for stress events. This has provided some upside risk on these contracts.
“Oil prices are just below $45/Bbl (£30.9/Bbl), retreats are being driven by US stockpile data and Middle Eastern production. Bullish sentiment over the production freeze which is still on the table is providing the upside for prices as well as pauses and decreases in rig counts and output.”