A slump in demand helps reduce wholesale prices
Gas prices posted downside at the NBP on Monday for the fourth consecutive session, with the largest moves once again observed at the front-end.
The January-25 contract shed a considerable 3.6p/therm (0.12p/kWh) when compared to its previous settlement price, as slumping demand perhaps remaining the key reason for the reductions on near-dated contracts.
Our latest 14-day forecast model shows that demand is expected to fall and remain below seasonal averages over the course of week 52.
Furthermore, windier conditions helped relieve some reliance on gas fired power generation. According to data from National Gas wind output saw a huge increase of 52% when compared to the previous gas day, all while CCGT (closed cycle gas turbine) offtake saw a drop of around 8% when compared to the same period.
In other news, the ongoing US LNG study (which aims to evaluate impacts on the economy, climate, and national security) is expected to be released this week. Should the report show that costs outweigh the benefits this may cause legal obstructions for incoming US president Donald Trump, who plans to scrap the pause on new LNG licenses which was implemented by Joe Biden earlier this year.
This morning, gas prices have rebounded at the NBP; the Summer-25 front-season contract last traded just under 1.5p/therm (0.05p/kWh) above its previous closing price.
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Price commentary courtesy of Crown Gas and Power 