Weekly market update - European gas prices dropped to a near 2-year low

Head of Sales Trading, Fanos Shiamishis, reports on energy market activity, covering the period 23rd May – 26th May 2023. On our end-of-day pricing tool, The Source, we published an in-week high of £136.36/MWh for the Winter-23 seasonal power price on 23rd May. In this blog, Fanos shares the market news and updates from the last week.

Last Tuesday, the front month was trading at the lowest price since June 2021, the Day ahead contract registered a small gain. Despite European gas inventories being 66% full, LNG continues to flow to Europe whilst Asian demand remains low.

The UK’s Day Ahead contract benefited from temporary restrictions on gas flows from Norway. Planned maintenance on the Vesterled pipeline reduced supply from Norway to the UK.

European gas prices dropped to a near 2-year low as supply remained stable and warm weather curbed demand. Q1-24 French Baseload contract fell by €23.5/MWh while W-23 UK Clean spark spread fell by £5.25/MWh amidst very low liquidity reportedly due market participants attending “E-world” in Essen, Germany. The European Commission has advised all EU countries to wind down their emergency support measures by the end of the year now that energy prices have fallen and the economic outlook has improved,

TTF month ahead continued to set new 2-year lows on Friday morning, trading at €24.90/MWh, down significantly from the €340/MWh levels registered in August of last year.  Mild temperatures, forecasted increase in LNG shipments, increased flows from Norway all supported the bearish sentiment.