NBP Day-ahead up 10% as prices rocket across Europe

A confluence of bullish drivers saw front-month contracts climb by over €1.00/MWh on the Dutch and German natural gas hubs on Tuesday, while the NBP Day-ahead shot up by 10% on surging demand.

The TTF May’16 contract rose by €1.038/MWh to close at €13.925/MWh, closely followed by a gain of €1.025/MWh on the NCG – the biggest jump on the front month since February 2015.

The Day-ahead on Britain’s hub was up by over 10% to 34.75p/th, the largest day-on-day price increase since November 2014.

The TTF Day-ahead rose by €0.862/MWh to €14.275/MWh, a 14-week high and the biggest jump of 2016. The NCG contract traded at €14.80/MWh during the session, before dipping to close at €14.30/MWh.

A cold snap in northwest Europe has seen gas consumption jump in the continent’s major markets: demand in Britain hit 287 million cubic metres (mcm) on Tuesday, while Dutch consumption reached 213mcm.

A short system in Britain was exacerbated by low imports from Norway. Ongoing maintenance at Easington was exacerbated by an outage at the Dimlington terminal, while flows via Langeled dropped by 10mcm/day.

The short positions triggered by last week’s stop-loss orders continued to push up the curve, according to one trader, though others suggested that these positions were now covered.

Marcel Boonaerts, head of trading at portfolio at WINGAS UK, suggested that market participants may be pre-empting an interest rate announcement due to be made by the US Federal Reserve on Wednesday.

A rate fall could bring down the value of the dollar, and in turn push up crude oil prices. Brent crude was trading at $45.60/bbl into the close, up 2.6% day on day. doug.grant@icis.com