Low consumption during the festive period allowed for strong injections into medium-range storage. Stocks have risen from under 50% of capacity before Christmas to nearly 90%. Centrica has also applied for permission to withdraw more cushion gas from Rough as the initial 9TWh of supply will likely run out by mid-January. The Forties pipeline outage, which caused such disruption in mid-December, has ended and operations have returned to normal. The higher UKCS production has added to strong imports from Norway, the Netherlands, and Belgium, which has meant the gas system has been comfortably meeting demand. Temperatures are forecast at around seasonal-normal for most of January, and contracts beyond the current winter saw no major price movement last week. Higher crude oil prices have provided some support to longer-dated annual contracts, but prices remain below their November highs.
Month-ahead power prices followed the gas market lower, dropping around 2% across the week. Longer-dated contracts saw little price movement during the Christmas holiday period. Day-ahead prices were pressured by weak demand as closed schools and businesses cut peak consumption to lows of 34GW. Storm Eleanor brought wet and windy conditions to the UK, which pushed up output from wind turbines, further reducing the need for gas and coal in the fuel mix. However, as business activity returns to full operation, consumption is expected to rise this week. Peak demand is forecast at over 50GW, up from around 46-47GW last week. Cooler temperatures and a drop in wind supply is expected to tighten surplus power margins.
Cold, windless days remain the biggest concern for the electricity market.