Wholesale gas prices slips in October

Display of Stock market quotesWholesale gas prices fell in the UK on Wednesday as reduced demand from gas plants boosted oversupply.

In the morning, Reuters reported that the price for next day delivery slipped by 0.30 pence to 39.80 p/therm. Meanwhile gas for immediate delivery dropped 0.50 pence to 39.90 p/therm.

The price drop came after National Grid data showed that the UK gas system was oversupplied by 22 million cubic meters (mcm) on Wednesday.

The oversupply came after two nuclear reactors came back online earlier in the week. Traders said that this eased gas demand from combined cycle gas turbines.

After the official winter gas season began in the UK on the 1st of October prices were down across the board. The October price was down 0.10 pence while the winter contract price dropped 0.05 pence.

Elsewhere, sources reported that Russia’s state-run Gazprom agreed a tentative deal to supply Ukraine with gas for the winter. The easing of relations, in addition to the perceived willingness on behalf of the European Commission to mediate will, over time, calm nerves and relieve some of the upward pressure on prices.

Downward trend in wholesale gas prices

More generally, the October price fall is a continuation of the downward trend in wholesale gas prices.

Business buyers who are considering when to buy a fixed-price contract for summer 2016 might be tempted to see how far this downward trend will continue.

But the waiting game should be played with caution.

With forecasters predicting one of the coldest winters for 50 years there is a strong possibility that the prices could rise before the warmer months.

Risk adverse buyers might think about banking soon; current prices are likely close to their floor.

Are these savings being passed on to the end-user?

Smaller firms might be concerned that this fall in wholesale prices will be slow in filtering through the supply chain. Mainstream suppliers are famously slow to reduce prices in line with wholesale price cuts.

Small companies in Greater Belfast will enjoy a recent 10% price cut from SSE Airtricity. This shows certain intent on behalf of suppliers to react to changes in the market price.

At Business Gas.com we try to keep our day-ahead prices as current as possible. Changes in the wholesale market price will be reflected in our rates. See our latest prices and calculate how much you could save.

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