Prices drop as demand eases in Mainland Europe

NPB prices corrected lower on Monday, though bearishness was most pronounced across the prompt and near-curve.

The pace of storage withdrawals has eased off in mainland Europe amid a brief period of warmer weather.

According to data from Gas Infrastructure Europe, withdrawals fell to a rate of around 0.34% per day over the weekend, down from an average of 0.63% in the earlier part of the week.

This may have allowed the market to shed some risk premium, by slightly weakening summer demand expectations.

A slump in US Henry Hub prices over the past few days may have served as a secondary source of pressure, with lower wholesale costs translating into cheaper cargoes on the spot market, a key area of supply right now.

Bearish demand fundamentals on the gas market seemingly filtered into the baseload power curve.

Weakness on the NBP meant that a rise in gas-fired power demand offered only limited, underlying support.

Elexon data shows that gas-for-power (CCGT) averaged at a rate of 17.6GW on Monday, around 43.2% of the GB power mix, overtaking wind as the largest source of generation.

Small gains on European oil and carbon benchmarks may have prevented more substantial losses.

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Price commentary courtesy of Crown Gas and Power