Falling demand helps reduce pressure on wholesale market

Falling demand and an optimistic outlook on supply security helped reduce gas prices further at the NBP on Wednesday.

Despite bullish moves seen throughout early afternoon trading, contracts across the curve settled below their close with the January-25 front-month contract posting the largest moves of the session; shedding more than 2.25p/therm (0.08p/kWh) when compared to its previous settlement.

Developing news regarding the looming end of Russian flows transiting through Ukraine likely weighed on gas prices. Slovakia (who is a key purchaser of Russian gas) has held talks with both countries and has signaled a potential solution whereby nominations will continue to pass through Ukraine, but the gas would not be Russian owned.

This development has perhaps provided European gas traders with some much-needed optimism for supply security heading into the new year. Additionally, demand continues to trend below seasonal norms. According to data from National Gas, forecast demand remained below seasonal averages for the third consecutive session and saw an 11mcm/d drop on average when compared to the previous gas day.

Furthermore, CCGT (close cycle gas turbine) offtake observed a huge 42% drop when compared to the same period. This morning gas prices have opened very much in line with their previous settlements.

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Price commentary courtesy of Crown Gas and Power