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Gas prices plumb new lows as spot slides under EUR 3

Gas

22 May 2020 10:46

Photo: Pixabay

Photo: Pixabay

Frankfurt

22 May 2020 10:46

(Montel) Gas prices hit record lows for a second consecutive day on Friday, with Dutch spot diving under EUR 3/MWh amid low demand amid the impact of the coronavirus crisis and oversupply.

On the Dutch TTF hub, the day-ahead contract fell EUR 1.10 to a fresh record low of EUR 2.35/MWh, while the front month lost EUR 0.32 to EUR 3.50/MWh.

It had dropped to EUR 3.50/MWh earlier in the day, the lowest price for a front month since records began on Ice Endex in 2005.

In the UK, the day-ahead contract last traded at 6.85p/th, down 1.90p, or 22%, after dropping as low as 6.70p/th in earlier trade, the lowest since broker records began in 2007.

The front month fell as low as to 8.09p/th, down 13% from Thursday’s close and the lowest since April 1998, on Ice Endex. The contract last changed hands at 8.61p/th.

“There are very strong winds across much of Europe this weekend and low holiday demand,” said a London-based analyst.

Negative prices?
With storage levels brimming, leading to low demand for injection, and strong LNG supply, especially from Qatar, there was a chance that NBP day-ahead prices might drop below zero, he added

In the UK, gas storage facilities were last seen 52% full, compared with 34% at the same time last year. In Europe, levels stood at 69%, compared with 56% a year ago.

“If we had a high renewables day coupled with low demand during a bank holiday or weekend and low injection demand – it [negative prices] is possible,” said the analyst, adding the last time UK day-ahead prices fell below zero was 2006, with a public holiday due on Monday in Britain.

On Sunday, wind power output in Germany, Europe’s biggest gas user, was expected to soar to 25.8 GW on average, 15.2 GW above the norm, while the UK should see values of 14.5 GW, 9 GW higher, data from Montel’s Energy Quantified showed.

UK gas demand over the next 24 hours of 165mcm/day exceeded forecast flows by around 9mcm/day, data from TSO National Grid showed.

Demand dive
On the UK power market, meanwhile, demand currently stood at the lowest level since 1984 amid the coronavirus related lockdown, said Catriona Lindsay, analyst at UK energy consultant DB Group Europe.

“We could potentially see [gas] prompt prices falling to negative, yes,” said another analyst amid the demand destruction due to the pandemic.

For the front month, however, it was less likely, he added.

Chances for negative TTF prices were also much lower, as there was more need for injection across Europe, said the first analyst.

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