Market maintains downward trajectory amid easing demand outlook

The market maintained a downward trajectory on Tuesday, with an easing demand outlook continuing to add weight to price at the front-end.

The latest run of our model has revised demand down to slightly below seasonal norms from Saturday 31st, holding below average until at least 6th February.

A steady stream of LNG deliveries is serving as a price ceiling for the front-month and season contracts.

So far in January, 24 cargoes have been received, 22 of which are from the US, with one each from Norway and Trinidad & Tobago.

Low storage levels in continental Europe continue to serve as an effective price floor. Data from Gas Infrastructure Europe shows that, as of Monday, EU storage stood at 44.23% (down from 55.72% last year).

Small moves posted in each direction along the baseload power curve as prices struggled to establish a clear direction and intra-day volatility settled.

A strong rebound in renewable power pressured contracts along the near-curve.

Elexon data shows that wind output surged to an average of 21.5GW from 12.7GW on Monday, this accounted for 50.5% of overall generation, greatly subduing gas-fired (CCGT) demand, which fell by almost half day-on-day.

Nuclear generation continues to trend slightly below the same period last year – due in part to works at Hartlepool, which have been extended until the end of the month.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power