The unseasonably cold weather has resulted in Irish wholesale gas prices being almost 40% higher this month when compared with March 2017. The Naturgy Monthly Energy Report for March 2018 shows that prolonged, below average temperatures combined with a lack of supply flexibility and significantly reduced gas storage facilities has resulted in the price of wholesale gas in the UK and Ireland being higher than the rest of Europe.
Commenting on the monthly report, Naturgy Energy Analyst, Catriona Walsh, said that: “March 2018 is going to be a month to recall in years to come with NBP prompt prices exceeding previous records. As the Beast from the East moved on prices slowly scaled back; however, bullish momentum is anticipated in the coming weeks as temperatures are anticipated to stay below seasonal norms and storage levels are running at historically low levels.”
Ms Walsh said that looking forward, gas supply and the low storage levels are going to impact the sector. “With gas storage across the continent severely depleted, a strong drive of injections throughout the summer could potentially drive gas away from an already volatile British market. To add to the bullish risks, UK Continental Shelf supply is continuing its decline and is currently 10mcm/day down from 2017 levels. Furthermore, imports from Norway are anticipated to be curtailed due to maintenance, while consumption is forecast to upturn.”
Gas Market Overview
In euro terms, Irish wholesale gas prices are almost 40% higher on average this month compared with March 2017. Prolonged unseasonably low average temperatures accounted for the majority of price increases, while the lack of storage and supply flexibility added an additional premium to the British market when compared with other European hubs. Following a bullish February, prices continued to increase, opening 11% higher in the opening week of March.
Electricity and Wind Update
The average wholesale price of electricity in the Irish market in March was at 6.85 c/kWh, which is a sharp jump of nearly 52% when compared with March 2017 and up almost 19% month on month. Wind generation reached 3,639 MW on March 14th, the highest level of the month, while average generation for the month was 1,437 MW, which was a decrease of 7% month on month. The low levels of wind generation in March had a significant impact and further supported the gains on power prices.