Wholesale marker reduces further amid softening demand

The market recuced further on Monday as participants eyed softening demand.

According to the latest run of our 14-day model, gas demand will fall back in line with seasonal norms from Thursday 27th November, coinciding with an increase in average UK temperatures and wind power output.

A robust supply mix helped reduce near-curve prices, with an ongoing glut of US LNG imports and relatively minor disruptions to Norwegian and UK supplies helping to ease supply concerns moving into the peak demand season.

Active peace talks between delegations from Ukraine, the US and European allies signalled tentative progress toward ending the Russia-Ukrainian war.

Baseload power prompt (same/next-day delivery) contracts, however, found firm support from elevated levels of gas-fired power demand during yesterday’s session, despite an anticipated recovery in wind generation later this week.

Fluctuations in renewable generation generally increases balancing costs as operators take more costly action to keep the grid safely balanced and this factor is likely serving as a source of support for near-curve delivery contracts.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power