Gas prices reduce as demand drops

Unseasonably low demand combined with stronger Norwegian flows helped ease gas prices on Thursday last week.

The biggest moves were posted across the near-curve, with both the front-month and front-season contracts each falling by more than 0.044p/kWh when compared to their previous close.

Persistently low demand likely helped ease prices; according to data from National Gas, demand totaled 216.5mcm across Thursday’s gas-day which was 29mcm below the seasonal average.

Furthermore, the latest run of our 14-day forecast model shows that demand will remain comfortably below seasonal norms until at least 15th April.

Additional pressure may have emerged from a surge in Norwegian flows, following a reduction in offline capacity at the Kollsnes processing facility. Data from offshore operator Gassco shows that export flows into the UK’s Easington terminal saw an increase of more than 21% day-on-day, contributing to an oversupplied UK system.

In other news, capacity remains curtailed at the Freeport LNG terminal. The Texas based facility has reportedly seen a 64% decrease in export capacity due to unplanned works that are now expected to continue into May. This is of course unwelcome news at European Gas hubs, with the UK being the world’s largest consumer of US produced LNG.

Natural gas prices continue to decline this morning, with the new May 24 front-month contract currently being offered circa 0.075p/kWh below its previous settlement, at time of writing.

The UK is currently consuming 32.68 GW’s of electricity at the time of writing (14:30 – 15:00).

Wind is currently only contributing 5.06 GW’s (14.41%) of the UK’s electricity generation mix. Gas is contributing the lion’s share at 11.50 GW’s (32.79%) of the total.

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