Gas prices posted gains yesterday despite a bearish opening as strong demand, caused by very cold temperatures dictated the near-curve. However, milder weather is expected towards the end of next week which limited the gains. Contracts at the back of the curve moved in the opposite direction on the back of weaker coal and oil markets.
Near-curve gas prices recorded significant losses yesterday following an upward revision in temperatures for the start of March which sparked a sell-off. Temperatures are expected to remain very cold this week across Europe, limiting some of the downward movement, while a rise in Brent offset the effects of weaker coal at the back of the curve.
The expected drop in temperatures across Europe this week resulted in strong upward movement across the near gas curve on Friday. The prompt recorded a strong gain due to the higher demand outlook with healthy renewables having little impact. Meanwhile, a drop in coal prices helped far-curve prices stabilise despite a jump in Brent.
Gas contracts continued to climb higher on Thursday as cold weather remained the main market driver. Below average temperatures are forecast across Europe in the coming days, tightening supply levels. Meanwhile, oil and coal markets recovered, providing additional support at the back of the curve.
Sentiment on the near gas curve remained bullish yesterday due to the impending cold spell which will increase demand levels and tighten the system. There was some uncertainty with regards to how long the cold spell will last, helping some contracts hold their price, while a drop in coal applied downward pressure to far-curve contracts.