Cold weather continues to pressure wholesale price
Gas prices continued to edge higher on Friday as unseasonably cold weather continues to bite.
A combination of cold weather and a bullish oil market dominated with the February-24 front-month contract gaining 0.12p/kWh day-on-day. Data shows this contract has moved up 0.4p/kWh when compared to 2nd January.
Expectations of below average temperatures was likely the prime source of pressure. Our latest 14-day demand forecast model shows that gas demand will outpace seasonal norms throughout weeks 2 and week 3, potentially due to an increase in heating related demand.
Additional pressure also came from a recovering oil market, ICE data shows the Brent Crude benchmark contract continued its upwards trajectory and increased by circa $1.25/barrel when compared to its previous close.
This morning gas prices have rebounded down slightly, with the Summer-24 front-season contract last trading circa 0.17p/kWh below its last closing price, however many are yet to trade at time of writing.
If we check the latest half hourly period at the time of writing (09:30 – 10:00), electricity demand has increased to 44.09 GW’s in the UK.
As demand increases, over 50% of the UK’s power is being generated from gas at the moment.
Specifically, 50.01% (22.44 GW’s) of the UK’s total electricity is being generated from gas with wind turbines only contributing 10.60 GW’s (10.60%).
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