Colder weather and geopolitical tensions drive prices up

Forecasts of cold, calm weather combined with escalating geopolitical tensions combined to increase gas prices on Wednesday.

The biggest gains were posted across the prompt and near-curve with the February-24 front-month contracting climbing circa 0.22p/kWh when compared to its previous close, likely due to a slump in wind generation.

CCGT offtake ramped up to make up for the deficit and saw a 28% increase when compared to the previous gas-day (data sourced from National Gas).

News of yet another attack on a commercial vessel travelling through the Red Sea (bound for the Suez Canal) also created an element of tension with data from ICE shows that the Brent Crude and WTI Crude benchmarks posted day-on-day gains of 3.1% and 3.3% respectively.

In other news, Libya’s National Oil Corporation has confirmed a full shutdown at the country’s largest oil field. The 300,000 barrel/d Sharara field has been forced to cease production following several days of protests by workers at both the Sharara and the nearby El-Feel field, subsequently taking another 70,000 barrel/d offline.

Gas prices continue their upward trajectory this morning, with the Summer 24 front-season contract currently being offered 0.1p/kWh below its previous settlement at time of writing.

If we check the latest half hourly period at the time of writing (09:30 – 10:00), electricity demand in the UK is 38.60 GW’s.

With the wind dropping, the UK has started to reply more heavily on burning gas to generate its electricity.

46.29% (18.83 GW’s) of the UK’s total electricity is being generated from gas at the moment with wind turbines only contributing 7.84 GW’s (19.28%).

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