Temperatures stay high and gas prices continue to drop
Gas prices continued to decline on Tuesday amid a well-balanced supply and demand dynamic.
Near-curve contracts observed the biggest losses of the session after falling 0.09p/kWh when compared to their previous close.
Expectations of warmer, windier weather likely played into the bearish sentiment. The latest 14-day gas demand model indicates that demand could remain below seasonal norms until at least 21st December.
Furthermore, strong and steady supplies continue from Norway, with minimal disruption from both planned and unplanned maintenance.
Data from offshore Operator Gassco shows that flows via the Norway-UK Langeled pipeline were nominated at 94.1mcm across Tuesdays gas-day which was enough to meet just over 30% of total gas demand. Contracts further out may have also traced losses in the oil market; data from ICE shows that the Brent Crude benchmark contract shed 3.7% day-on-day (down 5.1% week-on-week) despite continuing hostilities in the Middle East.
In other news, UK operator Neptune Energy and its partners have announced a new discovery in the Norwegian North Sea at the Kyrre prospect close to the existing Gjøa field. This comes on the back of the recently drilled Ofelia well and together the two discoveries are estimated to contain up to 52 million barrels (oil equivalent) of gas reserves.
This morning, although gas prices had initially traded slightly below their previous close most are now being offered more than 0.06p/kWh above their previous settlement, at time of writing.
If we check the latest half hourly period at the time of writing (10:00 – 10:30), electricity demand in the UK has increased to 42.28 GW’s with the milder weather helping.
48.46% (20.49 GW’s) of the total is being generated from gas at the moment with wind turbines contributing 11.44 GW’s (27.06%) and Nuclear the next biggest contributor at 11.08% (4.68 GW’s).
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