Gas prices retrace previous position as abundance of gas hits UK shores

Gas prices retraced their previous position on Monday, pressured by an abundance of LNG and an oversupplied system.

Contract prices across the curve lost value with the largest movement seen to the near-curve as usual; the January-23 front-month contract shed a huge 0.31p/kWh when compared to its previous settlement.

This was derived from a surge in LNG vessels headed to British shores. The latest shipping signals indicate that nine laden vessels are scheduled to arrive within the next twenty days; this is in addition to two LNG ships which offloaded cargoes at UK terminals over the weekend.

Furthermore, an increase in Norwegian flows likely played into the bearish sentiment. Data from offshore operator Gassco shows that nominations into the St Fergus and Easington terminals increased by more than 4mcm day-on-day.

This helped push the gas grid into oversupply adding further pressure to contracts at the front-end.

This morning, gas prices have continued their downwards momentum at the NBP; the Summer-24 contract last traded circa 0.07p/kWh below its previous closing price.

If we check the latest half hourly period at the time of writing (10:30 – 11.00), electricity demand in the UK is 42.88 GW’s. 52.29% (22.68 GW’s) is being generated from gas at the moment with wind turbines contributing 8.68 GW’s (20.01%) and Nuclear standing at 10.98% (4.76 GW’s). The 3 main sources of electricity account for over 84% of the UK’s generation.

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