Low demand and high wind drive gas prices down

Day ahead gas prices were hammered down on Tuesday amid unseasonably low demand and bearish supply fundamentals.

The biggest moves were posted across the prompt and near-curve, with the November 23 contract closing out circa 0.48p/kWh below its previous close.

Mild temperatures and windy conditions continued to keep a lid on gas demand. According to data from National Gas, total British demand was expected to total 204mcm across the gas-day, which was a considerable 56mcm below seasonal norms.

Prices were also helped with news of a good number of incoming LNG vessels due to dock in the UK. Shipping signals indicate that 11 laden cargoes are set to arrive at British terminals over the next 2 weeks, this includes the Methane Patricia Camila, which is expected to offload Peruvian Volumes at Dragon No1 terminal later this evening (data from Milford Haven).

Norwegian supply disruptions however possibly limited losses at the front-end, data from offshore operator Gassco shows that unplanned maintenance at the Nyhamna facility has been extended and will continue to remove 27.8mcm/d until Thursday 2nd November due to a compressor failure.

Gas prices have opened slightly higher this morning, with the new December 23 front-month contract currently being offered circa 0.03p/kWh above its previous settlement, at time of writing.

At 10am today, 48% of the electricity generated in the UK is from wind generation with Gas for power only generating 8%.

We really recommend that you track the latest wholesale market trends so you can make a more informed decision when your contract comes up for renewal.

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