Friday 13 February 2015

Gas prices drop back to seasonal normal levels – DMR

Gas prices drop back to seasonal normal levels – DMR

Gas prices have fallen from yesterday’s bullish run, according to the daily market report.

Tim Carter, Client Portfolio Manager on npower's Optimisation desk said: “A strong bullish run towards the end of yesterday sent prices soaring to new highs for 2015 as late buying interest and increased fears over the four-year Dutch production caps exaggerated the recent bullish run.”

Three key drivers affected prices today, said Mr Carter.

He said: "The first being temperatures are warmer today, decreasing demand and resulting in an over-supplied gas system. A ceasefire had been agreed yesterday for peace in Ukraine but the market remains sceptical about how long that might last. [Thirdly] the pound strengthened markedly against the dollar."

UK gas system is over-supplied with the linepack currently forecast at seven million cubic metres (mcm) long as demand dropped back to seasonal normal levels. CCGT demand is "scaling back" as the gas prices soared yesterday, he added.

"Gas prices this morning have shed more than a penny on the front month from yesterday’s closing prices. Mostly as markets correct from an overbought position yesterday," he said.

The power system is comfortable with peak margins today of more than 12GWtoday as demand drops to under 51GW and there is strong wind generation of over 5GW, he added.

Written by

Bruna Pinhoni

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