Gas prices spike as demand for gas increases

Day ahead gas prices increased amid bullish carbon futures and higher demand.

The December-23 front-month contract posted the largest moves of the session fueled from an increase in gas demand, going up by 0.27p/kWh, when compared to its previous settlement, with contracts further out following the same sentiment.

According to data from National Gas, demand was forecast to increase by a considerable 8.3%, likely driven by a substantial drop in wind generation which subsequently increased the reliance on gas-fired generation by a huge 108% when compared to the previous session.

Additional support to contracts further out was perhaps attributed to bullish moves posted on carbon market. ICE data shows the December-23 EUA benchmark contract increased by more €1.6/tonne on Thursday, the largest day-on-day gain since the 10th October 2023.

In other news, the European Parliament has approved a resolution which will close EU markets and prohibit the shipments of Russian oil and LNG exports travelling through EU territory.

The notion also looks to introduce volume caps on Russian fertilisers and ban the cutting of diamonds of Russian origin.

At the time of writing today, day ahead gas prices have dropped, continuing with its recent yo-yo effect seen throughout sessions this week. The Summer-24 contract last traded circa 0.24p/kWh below its closing price.

If we check the latest half hourly period at the time of writing (09:00 – 09.30), just 12.44% (4.72 GW’s) of the UK’s total electricity demand (35.52 GW’s) is being generated by wind turbines with gas playing a much bigger part and by far the highest contributor at 38.28% (14.89 GW’s).

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