Overall gas demand rose to six-month highs, lifted by the heavy storage injections that have taken place over October. Medium-range storage stocks are now close to maximum capacity, curtailing further demand for injections and providing security of supply. This has been echoed around Europe, as storage stocks on the Continent have added 37TWh of gas so far this month, marking an all-time record high for the first half of October. After dipping close to the two-month lows hit last week, prices rose on Friday as forecasts showed a cold weekend, as temperatures are expected to fall below seasonal-normal.
However, prices have fallen again this morning with forecasts of milder temperatures, as the week progresses, and strong winds to cut gas for power generation. It still remains to be seen how the gas system will cope with an extended high demand situation this season, to which the response will shape price movement over the winter.
Electricity contracts were similar to that of the gas market, as the majority made very little overall movement. Day-ahead prices have seen the greatest change across the week, rising by almost 3%, as lower wind output this week has pushed electricity demand up by over 5GW to highs of 42GW.
The loss of embedded generation last week saw the increased requirement of gas and coal in the fuel mix. Coal use rose fourfold over the period, providing an average of 3.5GW daily.
Electricity demand will rise through the winter as evenings darken earlier, further accelerating when the clocks change on Sunday. Combined with a forecasted drop in temperatures over the weekend, power demand is expected to peak at over 45GW during that last week of October. How the grid copes with supply margins, as demand increases, particularly during days of low wind output, will shape price movement this winter.