High wind conditions helps reduce wholesale prices
High wind output and steady Norwegian imports combined to reduce gas price on Wednesday.
Bearish sentiment was most pronounced at the front-end, with the August 24 front-month contract posting losses of circa 2.5p/therm (0.085p/kWh) when compared to its previous close.
A sharp increase in British wind output likely served as a key source of prices easing throughout the session; according to data from National Grid wind generation averaged 10.7GW on Wednesday, representing an increase of 55% day-on-day and accounting for more than 36% of the generation stack. This no doubt suppressed gas-fired power demand (CCGT) which totaled just 4.8GW and accounted for 16% of power generation over the same period and potentially helped to boost storage injections.
At the same time, steady pipeline flows from Norway over the past few days likely helped to sure up confidence in the UK’s short-term supply and demand balance. According to data from offshore operator Gassco, flows via the Langeled interconnector totaled circa 73mcm which was enough to meet around 50% of the UK’s gas needs on Wednesday.
This morning, gas prices have so far continued their downward trajectory with the Winter 24 front-season contract currently being offered circa 0.5p/therm (0.017p/kWh) below its previous settlement at time of writing.
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