Gas prices ease amid oversupplied system
A surge in wind output and an oversupplied system helped reduce Gas prices further on Wednesday.
Prices across the curve traded within a narrow range with the majority observing small losses; the July-24 contract saw the largest moves of the session, shedding just over 0.02p/kWh when compared to its previous settlement.
Mild and windy conditions likely acted as the main reason for price reductions at the front-end. Data from National Gas shows wind-generated power saw a significant 32% increase day-on-day, which subsequently reduced reliance on CCGT (combined cycle gas turbine) offtake which saw a huge drop of 44% when compared to the same period.
When combined with reduced heating related demand the British system was pushed into oversupply and was 4.4mcm long at 15:00 London time (data from National Gas).
However, a strengthening oil market perhaps limited any substantial losses. According to ICE, the Brent Crude benchmark contract saw a sharp day-on-day increase of $2/barrel and reached its highest closing price since November 6th, the surge in price can likely be attributed to recent drone strikes on Russian refineries by Ukrainian forces.
This morning gas prices have opened relatively unchanged when compared to their previous close, although many contracts are beginning to show bearish signs at time of writing.
The UK is currently using 34.49 GW’s of electricity at the time of writing, low for the time of year and no doubt helped by the mild temperatures we are witnessing at the moment.
Wind is still generating the highest proportion of electricity this morning at 11.84 GW’s (32.10%), with gas contributing 8.23 GW’s (22.30%).
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