Gas prices continue to drop as supply is not balancing weaker demand
Warmer than normal winter weather limits gas demand in the residential and commercial sectors, while stronger availability of wind and hydro output across Europe is influencing power sector gas demand.
Heating degree days in the first half of February were 15% below normal. Last year, HDDs were 14% above normal. The effect on gas demand is estimated to be around 175 mcm/d. British gas demand has been at a seven-year low so far this winter. Between 1 Oct and 17 Feb, NBP demand averaged 254 mcm/d, down 11% year-on-year and the lowest since winter 2006-07.
Russian gas flows continue to show year-on-year growth, limiting European gas storage withdrawals. LNG is disappearing from Europe as both demand and spot prices drop.
Unless pipeline supplies are cut, the spot gas price will continue to weaken.
UK monthly avg. gas demand in million cubic meters per day (Source: Reuters)