Unseasonably cold weather drives prices up

Gas prices edged higher on Thursday amid tumbling wind generation and forecasts of unseasonably cold weather.

The biggest moves were posted across the prompt and near-curve with the February-24 front-month contract gaining circa 0.055p/kWh when compared to its previous close, contracts further out followed the same sentiment although the gains were much smaller.

Forecasts of plummeting temperatures across the next two weeks likely acted as a prime reason for increases at the front-end.

Our latest 14 day demand forecast model indicates that demand will lift above seasonal norms from 6th January until at least 18th January, likely on the back of higher heating-related demand.

Plentiful storage levels however likely helped to keep the bulls at bay, data from Gas Infrastructure Europe shows that aggregated EU storage levels stand at just under 86%, which is 2.5 percentage points above the same date last year.

Prices continue to build upon the previous sessions gains this morning, with the Summer 24 front-season contract currently being offered circa 0.034p/kWh higher when compared to their previous settlement at time of writing.

If we check the latest half hourly period at the time of writing (10:00 – 10:30), electricity demand in the UK is 39.02 GW’s.

With the wind dropping, the UK has started to reply more heavily on burning gas to generate its electricity.

46.74% (18.24 GW’s) of the UK’s total electricity is being generated from gas at the moment with wind turbines only contributing 9.11 GW’s (23.34%).

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