Gas market – Power sector demand for gas affecting gas storage levels
Gas prices reached a peak at the end of May with NCG YR-19 at around EUR 21.80/MWh. Prices have since declined marginally, with YR-19 trading at EUR 20.50/MWh at the time of writing.
Despite the drop, the gas market appears to be generally well supported, since winter ended with very low levels in the storage facilities. Major injections will be needed throughout the summer to achieve normal storage levels for the start of next winter, and any disruption to supply from Russia, Norway or the Netherlands will push the market up.
The only factor that can actually help storage levels return to normal more rapidly is the power sector’s demand for gas. If there is above normal wind power production for an extended period, and low summer temperatures (keeping air conditioning consumption below normal) this could help promote faster filling.
However, the current weather outlook is more the opposite. So overall, the gas market appears well-supported, but seems to have hit resistance to climbing higher than the peak in late May.
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