Wholesale prices down amid muted demand
Gas prices at the NBP fell for the fifth consecutive session on Monday amid steady gas supplies and muted demand.
The biggest losses, though fairly modest, were posted on the September 25 contract, which declined by around 1p/therm (0.034p/kWh) when compared to the previous close, as low demand directs more gas flows toward storage facilities, easing risks later in the summer.
British system demand plummeted to just 164.7mcm across Monday’s gas-day as well-above-average temperatures and muted gas-for-power (CCGT) offtake eased system constraints.
A gradual reduction in Norwegian pipeline flows to terminals in Great Britain, along with slowing LNG imports, means that UKCS production has been relied upon as the single largest source of supply of late. According to data from National Gas and Gassco, domestic production met just under 100mcm on Monday, enough to meet more than 50% of overall demand.
On the LNG front, following the arrival of the ‘Tembek’ from Qatar at Milford Haven overnight, the latest shipping signals indicate that only two laden vessels are expected to arrive over the next three weeks, with LNG storage having recently fallen below the same date last year.
This may be due to recent bearishness at European gas hubs reducing the relative attractiveness of spot market prices compared to other regions.
In other news, Spain, Portugal, and parts of France experienced widespread power outages yesterday after a major interconnection point between the power grids of France and Spain experienced a sudden outage.
The incident, which reportedly caused the Spanish grid to lose 15 GW of power within 5 seconds (equivalent to 60% of national demand), appears to be resolved for all three countries as of this morning.
The market continues to go down so far today, with the Winter 25 front-season currently being offered circa 0.5p/therm (0.017p/kWh) lower when compared to its previous settlement, at the time of writing.
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Price commentary courtesy of Crown Gas and Power 