Milder weather drives gas prices lower

Milder weather forecasts and steady supply fundamentals combined to drive gas prices edged down on Monday.

Both the front-month and front-season contracts broke below the apparent psychological barrier of 3p/kWh, with contracts across the near-curve closing the session circa 0.22p/kWh below their previous close.

Our latest demand model shows that demand is expected to remain below seasonal norms across much of the next 2-week outlook, on the back of milder temperatures across much of Europe.

Further pressure likely came from a barrage of incoming LNG cargoes, the latest shipping signals indicate that as many as 12 laden vessels could arrive on British shores over the next 2 weeks. The influx could be attributed to weak Asian spot prices and continuing disruptions at the Panama Canal which have likely helped divert more cargoes to European terminals.

This morning, gas prices have continued their downwards trajectory with the Summer 24 front-season contract currently being offered circa 0.03p/kWh below its previous settlement, at time of writing.

If we check the latest half hourly period at the time of writing (09:30 – 10:00), electricity demand in the UK has dropped to 36.32 GW’s with the milder weather helping.

39.62% (14.26 GW’s) of the total is being generated from gas at the moment with wind turbines contributing 13.47 GW’s (37.10%) and Nuclear is contributing at 12.93% (4.70 GW’s).

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