UK gas and power rebounded firmly on Thursday, with day-ahead gas closing in the low 220s p/therm and day-ahead baseload power in the low £220s/MWh, both up sharply on the previous session. Colder weather, a weak wind picture and a fresh round of Norwegian supply outages did the work, and renewed tanker incidents in the Strait of Hormuz offset what had been a softer tone after the US midterm result. Forward contracts rose too, though by considerably less than the prompt.
Gas supply remains the pressure point. A large Norwegian field is offline until the middle of the month, European storage is well below its five-year average for the time of year, and the market is still paying a premium for near-dated molecules over anything delivered beyond next spring. The picture has eased a little this morning, with more Norwegian gas arriving, stronger LNG sendout and better wind forecasts pulling the front of the curve back down and leaving the UK system modestly long.
Elsewhere, crude rallied on the day but is heading for a sharp weekly fall, coal continued to drift lower, and both European and UK carbon allowances eased. With UK carbon softer and gas firmer, generator margins on near-dated gas-fired output are now very thin, which is a large part of why prompt power prices swing so widely when wind underdelivers. The full report carries the settlement levels, supply-side detail and the half-hourly system price picture.
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