Gas prices down amid forecast of milder weather

Gas prices resumed their downwards trajectory on Thursday amid steady supply fundamentals and forecasts of unseasonably low demand

Prompt and near-curve contracts lost the most value, with robust supplies and high storage levels continuing to help shrug off supply uncertainty as European markets move deeper into their second winter without the bulk of Russian pipeline flows.

On the LNG front, data from National Gas shows that LNG send out averaged 79mcm/d across Thursday session, enough to meet around 25% of UK demand over the same period.

Furthermore, disruptions at the Panama Canal have diverted an exceptionally high number of spot cargoes toward European markets, with the latest shipping signals indicating that as many as 9 laden vessels could berth at British terminals over the next 10 days.

Downward revisions to demand forecasts across the next couple of weeks may also have played into bearish sentiment. The latest run of our 14-day demand model shows that demand will average well-below seasonal norms until at least 28th December, likely on the back of milder temperatures forecast across much of Western Europe.

Bearish sentiment continues to dominate this morning, with both the front-month and front-season contracts currently being offered 0.1p/kWh below their previous settlements at time of writing.

If we check the latest half hourly period at the time of writing (12:00 – 12:30), electricity demand in the UK is 43.60 GW’s.

40.15% (17.51 GW’s) of the total is being generated from gas at the moment with wind turbines contributing 14.07 GW’s (32.27%) and Nuclear the next biggest contributor at 10.93% (4.76 GW’s).

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