Prices drift lower despite forecast of cold weather
Gas prices drifted lower on Friday despite forecasts of freezing temperatures over the next fortnight.
Small losses were posted across the majority of the curve with the Summer 24 front-season contract falling 0.04p/kWh below its previous close amid steady pipeline and LNG supplies.
According to data from offshore operator Gassco, nominations via the Norway-UK Langeled pipeline were nominated at 82.3mcm. This was however slightly lower than the previous session, due in part to an unplanned outage at Aasta Hansteen that removed 15.8mcm due to process problems but has since been resolved.
A busy LNG delivery schedule however likely helped the situation; the latest shipping signals indicate that 4 laden vessels are set to arrive at British terminals across the next 2 weeks. This includes the Maran Gas Olympias, which is scheduled to offload Peruvian volumes at Milford Haven on Tuesday evening.
It wasn’t all plain sailing however with some intra-day volatility amid fears of a looming cold snap, our latest 14-day demand forecast shows that cold weather will continue to propel demand well above seasonal norms until at least 10th of December.
Prices however continue to decline this morning, with the December 23 front-month contract currently being offered 0.17p/kWh below its previous settlement at time of writing.
As it gets colder we are starting to consume more gas and electricity. If we check the latest half hourly period at the time of writing (09:00 – 09.30), electricity demand in the UK has increased to 39.01 GW’s. 50.21% (20.28 GW’s) is being generated from gas at the moment with wind turbines only contributing 7.75 GW’s (19.18%) of the total generation mix.
If the temperature stays low, demand continues to increase and we continue to generate most electricity from gas, expect the wholesale market to go up.
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