Gas prices soften as demand drops and wind picks up

Gas prices softened on Wednesday, amid unseasonably low demand and plunging oil prices.

The biggest moves were observed at the front-end, with contracts across the near-curve shedding circa 0.7p/kWh on the back of bearish weather and wind forecasts.

According to our 14-day model, demand is expected to remain comfortably below seasonal norms until at least 14th May, coinciding with an anticipated fall in heating-related demand.

Contracts further out saw comparatively smaller losses, possibly in response to weakness on the oil market. Easing Middle East tensions and climbing crude oil reserves in the US combined to push the Brent Crude benchmark down to an assessment of $83.44/barrel, representing a decrease of 3.3% when compared to the contracts previous settlement (data from ICE).

The market has gone up this morning with both the front-month and front-season contracts being offered more than 0.1p/kWh above their previous settlements, at time of writing.

The UK is currently consuming 31.68 GW’s of electricity (14:30 – 15:00).

The wind has picked up a lot today! The UK’s onshore and offshore wind turbines are currently generating 11.87 GW’s (34.84%) of the UK’s total electricity with gas for power now generating only 2.80 GW’s (8.20%) of the total. Fortunately the above average temperatures is keeping overall demand lower which might help put a cap on potential increases.

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