Wholesale prices down to lowest level since April 2024

Gas prices were hammered down at the NBP on Thursday afternoon amid news of continued gas transmission via Ukraine.

Exceptionally high volatility was observed across the curve, with both the front month and front season contracts shifting slightly higher in morning trade before plummeting by around 10p/therm (0.34p/kWh) to the lowest levels seen since the end of April.

Afternoon trade brought with it news that Ukraine could continue to transport gas after the expiration of the existing Russian Transit agreement on December 31st. News outlet Ukrainska Pravda reported that Ukraine had agreed to facilitate the transportation of Azerbaijani gas to the EU in order to help bolster supplies whilst reducing Moscow’s gas revenues.

However, it now appears that the story was somewhat inaccurate, or included information that had not been properly validated. When asked to comment on the transit agreement, two Azerbaijani energy sources dismissed the validity of the story and the original (anonymous) Ukrainian government source followed up by clarifying that there was no signed agreement in place as of Thursday evening.

Elsewhere in the world, Egyptian Prime Minister Madbouly signaled at a news conference on Thursday that domestic production should return to normal levels by Summer 2025 after the government allocated funding in next years fiscal budget to settle arrears with foreign operators along with reserves of fuel to ensure that power stations can run smoothly during periods of elevated temperatures. This should help to free up LNG capacity for the European market, after Egypt’s unprecedented purchase of 20 cargoes of the fuel for this winter due to weaker domestic output.

This morning, curve contracts have retraced slightly, with the clarification that the Azerbaijan deal has not yet been formally agreed minimising the weight of yesterday’s news.

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Price commentary courtesy of Crown Gas and Power