Forecast of temperature drops fueling gains on the wholesale market

Day ahead natural gas prices were lifted on Wednesday amid a continuation of overall bullish fundamentals.

After opening in slightly bullish territory, the majority of curve contracts held their positions throughout the session with only the November-23 contract showing considerable gains.

Gains posted to the front-end were likely driven by cooler than average temperatures as expectations of unseasonably cold weather are anticipated throughout week 44 and into week 45.

A strengthening oil market also likely played into the bullish sentiment. Data from ICE shows the Brent Crude benchmark contract increased by over $2/barrel on Wednesday, the largest increase in a single session seen in almost two weeks. The gains were likely in response to ongoing geopolitical tensions in the Middle East and developing news on the Baltic-connecter pipeline.

Finland’s Bureau of Investigation has announced that the damage sustained to the Finnish/Estonian interconnector (which occurred earlier this month) was caused by an anchor striking the pipeline, however the bureau has not yet concluded whether the incident was an intentional act.

At the time of writing (26/10/2023), gas prices have once again opened in positive territory, with the Summer-24 contract last trading 0.05p/kWh above its previous close.

Given that wholesale price volatility is not going away for quite some time, we really recommend tracking the latest wholesale market trends so you can make a more informed decision on renewal.

Click here to see the latest information and subscribe. We will send the latest report to your inbox every Monday morning.