Gas prices edge lower amid forecasts of milder weather

Gas prices edged lower on Friday amid forecasts of milder weather and plentiful storage stocks.

Day ahead prices resumed their downwards momentum, with near-curve contracts losing circa 0.07p/kWh when compared to their previous close.

Forecasts of relatively mild temperatures may have served as a key source of pressure as Europe marches on from the recent cold snap with plenty of gas left in storage. According to the latest data from Gas Infrastructure Europe, EU storage facilities hold strong at 91% full which is around 8 percentage points above the 5-year average for that date.

Contracts further out may have found support from a weakening carbon market; the Carbon EUA benchmark contract continued its descent to close at the lowest level seen since September 2022 (data from ICE).

In other news, the European Parliament has reached a deal that would allow individual EU member states to ban Russian LNG imports without the need for any additional energy sanctions. Although the UK had placed a ban on Russian LNG from the beginning of this year, most EU countries continue to import the fuel, with Russia currently serving as the EU’s second biggest LNG supplier so far this year- after the US.

Contracts continue to head south this morning, with tumbling Asian spot LNG prices helping to shave a further 0.17p/kWh off the January 23 front-month contract when compared to 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 has dropped to 39.95 GW’s with the milder weather helping.

40.90% (16.72 GW’s) of the total is still being generated from gas at the moment with wind turbines only contributing 10.09 GW’s (24.69%). Nuclear is contributing at 11.54% (4.72 GW’s) and solar adding 1.37 GW’s (3.35%).

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