Gas prices moved down on Thursday with direction provided by an expected rise in temperatures next week which will reduce residential demand. Healthy wind levels are also forecast, resulting in lower gas-fired power demand which provided further downward pressure. Meanwhile, oil prices displayed a strong decline which transferred to contracts at the back of the curve.
Near-curve gas contracts increased in price on Wednesday with direction coming from cold temperatures which have lifted demand and tightened systems. An unplanned outage at the Forties pipeline also affected gas supply, providing additional support. Meanwhile, oil prices dropped in the afternoon and this helped to weigh on some far-curve contracts later in the session.
The system tightened yesterday due to cold temperatures, resulting in bullish movement across the near-curve. Gains were also visible on the far-curve but the upward movement was capped by falling coal and oil markets. However, coal prices could increase significantly if Colombian workers go on strike due to a wage dispute.
Gas prices decreased during Monday’s session as the current cold spell is only expected to last until the weekend and the impact on storage levels should be minimal; a mild January has kept storage levels above the seasonal norm. Contracts further along the curve were pressured down by losses on the oil market, with bearish sentiment provided by an expected rise in global interest rates.
Gas prices climbed higher on Friday as a significant drop in wind levels and cold temperatures were expected today, increasing demand levels. IUK flows improved slightly and this helped to balance the system. Meanwhile, oil prices strengthened and this helped contracts on the far-curve close at a premium.