Low storage levels increases pressure on wholesale prices

Gas prices edged higher at the NBP on Friday, amid dwindling storage levels and fresh US sanctions.

The Summer 25 front-season contract was propelled a further 1.25p/therm (0.04p/kWh) above its previous close as market participants zeroed in on relatively low continental storage.

According to Gas Infrastructure Europe, the recent cold snap has weighed heavily on EU stockpiles. The latest data shows reserves at 66.38% at 11th January, which is approximately 16.5% percentage points below the same date last year, this means that the region will have a tougher task when it comes to replenishing stocks when compared to the past couple of years without Nord Stream flows.

At the same time, the EU also has to contend with the discontinuation of Ukrainian transit at the end of last year, driving supply uncertainty.

News of the toughest US energy sanctions since the beginning of the Ukraine war will have also fed into the bullish sentiment.

On Friday, the United States Treasury imposed sanctions on two major Russian oil producers, along with 183 oil and LNG tankers known to be (at least partially) in the service of Russian producers. Russian LNG is not formally sanctioned by the EU as things stand so European gas hubs will be assessing how individual nations react to this latest round of sanctions.

This morning gas prices have opened in bullish mode, with the February 25 front-month contract currently being offered circa 4.5p/therm (0.15p/kWh) higher than its previous settlement, at time of writing.

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Price commentary courtesy of Crown Gas and Power