European and UK power and gas prices have eased for a seventh day on Wednesday with little change on the near-term fundamental outlook. Mild temperatures are set to continue until the end of the month, likely to result in more gas left in storage facilities. The mild and windy weather has eased gas consumption by both the residential and commercial sectors, whilst industrial demand continues to be curbed due to high fuel prices and a downturn in business cycles. In the UK, the Summer-24 baseload fell below £60/MWh which was last seen back in August/September 2021. With only a month and half left of the winter season, given the demand levels are likely to remain subdued, storage levels are expected to remain close to record highs. Various reports suggest the likely range is from 44% to 61%, with expectations in the middle. According to a Reuters article “with so much gas carried over there will be less storage space than usual to absorb during the summer refill season in 2024. Spot and forward prices are likely to remain under downward pressure until the storage surplus stabilises and leaves enough room to absorb excess seasonal gas production over the summer”. Are we likely to see summer prices fall towards £50/MWh?
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