Prices drop amid strong LNG supply and declining demand forecast
NBP gas prices downtrend resumed on Wednesday amid strong LNG supply and softening demand in the lead up to the festive period.
Key contracts eased to a monthly low, unwinding the small gains posted in the previous session. According to data from ICE the January 25 front-month contract declined by 2.4p/therm (0.08p/kWh) day-on-day to settle at its lowest level since 8th November.
On the LNG front, further to the 8 arrivals already logged in December, shipping signals suggest that a further 9 vessels could berth at British terminals over the next fortnight. So far this week, send out into the British system has averaged higher than at any time since January of this year. Within session LNG flows have averaged at 103mcm/d up to this morning, providing enough volume to meet around a third of demand across this week (data from National Gas).
A bearish demand outlook in the run up to Christmas likely contributed additional bearishness to the January 25 contract. According to the latest 14 day forecast, demand will decrease to below seasonal norms from 15th December, with milder temperatures due to arrive for the second half of the month.
In other news, Austrian operator OMV confirmed the termination of their long-term supply agreement with Russia’s Gazprom PJSC export arm on Wednesday. Citing that Gazprom had breached multiple contractual obligations, OMV pulled out of the contract early as it had originally been fixed until 2040. This will bring an end to over 50 years of direct Russian gas flows into Austria.
For now at least, these volumes are apparently being redirected to other countries/spot markets when they reach the Austrian border.
This morning, the market has so far continued its downward trajectory and is currently testing new monthly lows, with the Summer 25 front-season contract currently being offered circa 2p/therm (0.07p/kWh) below its previous settlement, at time of writing.
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Price commentary courtesy of Crown Gas and Power 