Gas prices rebound as demand goes up

Gas prices rebounded slightly on Thursday as the current cold snap started eating into storage levels.

The biggest moves were posted across the near-curve, where contracts saw upside of up to 0.08p/kWh when compared to their previous close. Data from National Gas shows that total demand was 375.5mcm which was a staggering 100mcm above the seasonal norm.

At the same time storage withdrawals surged to a rate of around 85mcm/d, an increase of 20% when compared to the previous session.

Furthermore, our latest 14-day demand model shows that cold weather will continue to drive gas demand above seasonal norms until at least 14th December.

Bearish moves on the wider energy complex likely helped to keep gains to a minimum, the Brent Crude benchmark contract saw day-on-day losses of circa 2.4% while the Carbon EUA benchmark continued to lose value, remaining at its lowest level in 13 months.

In other news, a four-day meeting of OPEC (Organization of Petroleum Exporting Countries) was concluded yesterday, the oil cartels 13 member states (who account for 40% of global production) voted to reduce daily output by an additional 900,000 barrels per day for Q1-24. However, doubts have emerged that the group will commit to this voluntary quota, with member state Angola confirming they will not be making cuts to oil production in line with the new quota.

Gas prices continue to edge higher this morning, with the new January 24 front-month contract currently being offered circa 0.03p/kWh above its previous settlement at time of writing.

If we check the latest half hourly period at the time of writing (11:00 – 11.30), electricity demand in the UK has increased to 43.14 GW’s. A massive 59.06% (25.48 GW’s) is being generated from gas at the moment with wind turbines only contributing 2.09 GW’s (4.85%) to the overall mix.

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