Day ahead gas prices reduce as demand eases

Lower demand and an international task force presence in the Red Sea combined to ease Gas prices on Tuesday.

Gas prices fell heavily in early trade following an announcement by Prime Minister Rishi Sunak to the cabinet that two UK warships have joined a US led task force in the Red Sea which will help provide security along the busy trading route amid ongoing tensions and recent attacks on cargo and oil vessels.

The news resulted in all contracts falling and reversing the gains posted in the previous session, with the January-24 front-month contract falling 0.24p/kWh when compared to its previous close.

Additional pressure also likely came due to forecasts of milder temperatures. According to our latest 14-day demand model, gas demand is expected to remain below seasonal averages for the next two weeks and into the new year.

This morning, natural gas prices at the NBP have opened slightly higher with the Summer-24 contract last offered over 0.09p/kWh above its previous closing price at time of writing.

If we check the latest half hourly period at the time of writing (11:30 – 12:00), electricity demand in the UK is 36.32 GW’s.

Fortunately, the UK is still be buffeted with high winds which is helping reduce our gas demand.

Only 7.62% (2.95 GW’s) of the total electricity is being generated from gas at the moment with wind turbines contributing a massive 20.68 GW’s (53.41%). Nuclear remains as the next biggest contributor at 11.98% (4.64 GW’s).

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