Subdued demand eases pressure on gas prices

Subdued gas demand combined with above-average storage levels helped to ease pressure on gas price levels on Wednesday.

A well balanced supply and demand outlook for the near-term likely fed into weakness at the front-end, with the July 24 front-month contract plunging by circa 2p/therm (0.07p/kWh) when compared to its previous close.

According to data from National Gas, actual system demand fell to 156.9mcm on Wednesday which was well below the seasonal norm of 201mcm- thanks in part to a 62.5% increase in wind output that eased gas-fired power demand across the gas-day.

At the same time, strong storage levels likely added additional weight to the curve and have long served as an underlying source of pressure for the front-winter contract. The latest data from Gas Infrastructure Europe shows that aggregated EU storage stocks have reached 75.95%, this is on a par with the (same date) last years exceptionally high levels [76.05%] and leagues above the 10 year moving-average of 61.35%.

This morning, natural gas prices have opened firm, with the Winter 24 front-season contract currently being offered circa 0.75p/therm (0.026p/kWh) above its previous settlement, as prices continue to test support and resistance within a narrow range.

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