Gas prices should continue to fall given “virtually everything” is in favour of forcing fuel costs down, according to Cornwall Insight analysts.
“Weather, infrastructure availability, energy demand, geopolitics, and macroeconomics” have all “swung in favour” of pushing prices down, said Gareth Miller, chief executive of the research firm.
European storage is higher than forecast due to mild weather this winter, Miller explained, with underground sites on the continent currently at around 81% capacity.
Storages sites should end the winter at around 50% full, as demand remains lower, leaving scope for more availability than usual heading into winter this year, he said.
Gas peaked at US$9.7 per British thermal unit (therm) last August in the wake of Russia’s invasion of Ukraine, but has since fallen to below pre-war levels and is now sitting at US$3.3.
Miller added that China’s reopening has not influenced spot liquified natural gas prices as much as was predicted, but it remained a key factor to keep an eye on.
Supply from Russia could also influence prices, with the chances of it increasing or decreasing still up in the air, according to Miller, who added: “Russia is not entirely a passive spectator as some have now painted it to be.”
Speculation that gas, which heavily influences other fuel and energy prices, could continue to become cheaper has grown in recent weeks.
Investec cut its predictions for Ofgem’s price cap to £2,478 by July on the back of lower gas prices, which would see it fall below the Government’s energy price guarantee of £3,000 – slashing public bills.
UBS analysts predict prices to rise again this year though, stating: “The energy problems of 2022 are here to stay”.