Gas prices are down by 22% since the start of the year
March has been another month of warmer than normal weather. If above-average temperatures persist then there will be very little to provide fundamental support. German day-ahead prices closed at their lowest level in more than two years.
The continent is due to start the gas storage injection season with a substantial overhang of remaining storage relative to previous years. The overhang is not only the result of an unusually mild winter, but also the weakness of power sector gas demand. Spark spreads are negative in most markets. Even Eon’s Irsching gas fired plant, the most efficient CCGT in Germany, would operate at a loss of -€6.62/MWh next year.
UK monthly avg. gas demand in million cubic meters per day (data source: Reuters)
UK gas price in pence per term (data source: Reuters)