Oil prices continue to fall after Saudi Arabia said on Friday it will freeze its output if Iran decides to do it as well.
Gemma Bruce from npower’s Optimisation Desk said: “Iran has already stated that it plans to boost its production levels after sanctions were lifted earlier in the year to grow market share and is not keen to partake in any production cuts. This leaves the outcome of the meeting between OPEC and other big oil producers this month in question with Iran’s oil minister saying he will attend if he finds the time.”
Brent oil is currently trading at $38.3/bbl (£26.4/bbl).
The power and gas markets are lower due to crude prices and comfortable supply demand fundamentals.
Ms Bruce added: “High European storage inventories at the start of this summer will mean demand for injection over the season will be 7mcm less than last year which will add to the pressure on prices at European hubs.
“Further adding to this bearish outlook for gas is the higher pipeline flows starting to filter through from the oil price declines at the start of the year and also the healthy level of LNG heading to Europe.”
The gas system has opened long with the linepack forecast 7mcm in length.
Norwegian flows via the Langeled pipeline are at more than 57mcm, the ones from the Netherlands are at 12mcm and LNG send out is at 30mcm.
Ms Bruce went on: “Demand continues to be supported above seasonal normal despite the warmer temperatures as power station demand continues to be high.
“With a number of coal stations coming offline at the end of March, gas-fired generation has had to step in and cover the shortfall especially today with wind output below 1GW.”