Subdued demand and strong LNG supply helps keep prices in check

Subdued demand and a positive LNG outlook helped gas prices during the holiday period.

Key contracts once again posted the biggest losses with the February-24 contract falling circa 0.1p/kWh when compared to the previous settlement, likely helped by lower-than-average gas demand.

According to data from National Gas, actual demand was 8.3mcm below seasonal norms on average for the holiday period and subsequently contributed to an oversupplied system.

This was likely helped further from a strong LNG outlook, with the latest shipping signals indicate that eight laden vessels scheduled to arrive on British shores by the 9th January 2024.

However, the recent adverse weather from Storm Garret has prevented vessels from offloading cargoes, data from the Port of Milford Haven shows that up to five LNG ships have been delayed by strong winds.

This morning, gas prices have opened in bearish territory at the NBP with the new February-24 front-month contract last trading circa 0.07p/kWh below its previous closing price at time of writing.

If we check the latest half hourly period at the time of writing (12:30 – 13:00), electricity demand in the UK is 36.68 GW’s.

The UK is still experiencing high winds which is helping reduce our need to generate electricity from gas.

33.69% (13.17 GW’s) of the UK’s total electricity is being generated from gas at the moment with wind turbines contributing a healthy 9.35 GW’s (23.93%).

If you want to see more information on the wholesale market trends subscribe to our weekly report here.