Wholesale gas price for Winter 2014/15 contract hits lowest level

The wholesale price of gas for delivery this winter, which has traded on the market for the past three years, has fallen to its lowest level ever paid, analysts and traders confirmed.

The fresh lows for the Winter 2014/15 gas contract stand alongside four year lows for near-term gas following months of steadily falling prices, which could heap further political pressure on energy companies to cut household bills.

Market participants first began trading gas for delivery in the winter 2014/15 in 2011, but recent bearish market fundamentals have pushed pricing levels to the lowest ever for this contract at around 55 pence per therm.

“Monday’s Winter ’14 gas price of 55.30 p/th is the lowest since the contract started active trading, pushed down by weak prompt prices and high storage levels,” said Platts energy analyst Alex Froley.

A UK energy trader told Utility Week that the price briefly fell below 55 p/th earlier on Monday before returning to similar levels in the afternoon.

Froley added that ‘prompt gas’, for next day delivery, has fallen to levels not seen since September 2010 at around 35.30 p/th, compared to last year’s average of 68 p/th across 2013.

Last year saw elevated pricing levels after the UK depleted its domestic gas storage stocks in late March following a long, cold winter. By contrast the most recent winter left gas storage relatively untouched, with little demand for storage injection over the summer.

“UK gas storage is now 82% full, whereas last year it was only 59% full at this point of the year, and took until the end of October to fill up,” Froley added.

Price reporting agency Platts recently published its monthly average for UK gas and power prices, which found that prompt gas prices were down 13% month over month and down 35% year over year. Meanwhile, UK prompt power prices averaged over June were down 8% month over month and down 23% year over year.