Volatility rules the day – DMR
Gas and power prices have opened high but quite volatile according to the daily market report from npower.
Tim Carter, Client Portfolio Manager on npowers Optimisation Desk said the main driver is the Dutch decision to cap production from one of their main gas fields at Groningen.
The analyst said: “The Dutch Government announced a 26bcm (billion cubic metres) per year reduction in the production at Groningen, which was much greater than widely expected.
“Although this doesn’t have a big impact during the current mild weather, it will have a much bigger impact on next winter, justifying a wider summer winter price spread.”
He said the gas system in the UK is short this morning because of the Combined Cycle Gas Turbine (CCGT) demand picking up to over 45 million cubic meters (mcm) keeping overall demand 30 mcm above seasonal normal levels.
The power system in the UK is still well supplied, despite wind generation below 1GW today, with peak margins forecast at just under 12GW, he added.