Gas prices drop amid good supply from Norway

Following two days of stagnation, gas prices dropped on Thursday amid increased Norwegian flows balanced with a drop in wind output.

Key contracts such as the Winter-24 contract posted some of the sessions largest moves, shedding more than 0.07p/kWh when compared to its previous settlement.

An uptick in Norwegian nominations likely served as a prime source of help; data from offshore operator Gassco shows that flows into the Easington and St Fergus terminals increased by circa 25% day-on-day.

However, a drop in wind-generated power perhaps limited downside at the front-end. According to data from National Grid, wind output fell by more than 21% when compared to the previous gas-day.

This likely bolstered CCGT (Combined-Cycle Gas Turbine) demand, which subsequently saw an increase of 48% across the same period.

In other news, the UK government has confirmed they will be withdrawing from the 1994 Energy Charter Treaty due to the limitations the agreement has on their push to net zero. The UK now joins nine other EU counties including France and Spain in their decision to withdraw from the arrangement.

This morning gas prices have continued their downwards trajectory with the Summer-24 front-season contract trading at more than 0.03p/kWh below its previous settlement.

In terms of electricity demand, if we check the latest half hourly period at the time of writing (09:30 – 10:00), electricity demand is currently 36.59 GW’s in the UK.

Although the wind has dropped it still accounts for the highest percentage of electricity generation in the UK this morning with 31.66% (12.34 GW’s) of the UK’s total electricity being generated from wind turbines at the moment. Gas is the next biggest contributor at 8.09 GW’s (20.75%).

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