Wholesale gas prices drop to a level not seen since January 2022

Gas prices broke through a key psychological barrier on Wednesday amid strong supply fundamentals.

Summer-24 front-season contracts traded below 2.4p/kWh for the first time since January 2022.

The drop in prices could be attributed to robust supplies in the face of sub-freezing temperatures. Strong Norwegian exports also helped at the front-end; according to offshore operator Gassco, nominations into Great Britain reached 89.1mcm on Wednesday- an increase of 9.5% when compared to the previous gas-day.

Further decreases likely came from an uptick in LNG supply, according to data from National Gas (within session) LNG send out flows have averaged at a rate of 106mcm/d since 8th January.

Furthermore, the latest shipping signals indicate that as many as 7 laden vessels could arrive at British terminals over the next 7-day outlook.

Finally, a weakening wider energy complex may have helped sentiment to the far-curve, with data from ICE showing that the Carbon EUA benchmark contract settled at just €63.15/tonne, the lowest level seen in more than 2 years.

Contracts have opened firm this morning, with most being offered 0.034p/kWh above their 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 is currently 47.09 GW’s in the UK.

Wind generation is currently contributing just over 16% of the UK’s total electricity demand.

Specifically, 16.18% (7.78 GW’s) of the UK’s total electricity is being generated from wind turbines currently with gas contributing 24.95 GW’s (51.89%).

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