High supply and low demand see gas prices fall to four-year low

Wholesale natural gas prices were at a four-year low early this month thanks to plentiful supply and low demand, according to figures published today.

The monthly Wholesale Market Report compiled by independent natural supplier Vayu shows that prices remain 30 per cent lower than at the same time last year.

A key reason is that there are large amounts of natural gas in storage in the UK, from where the Republic buys most of its gas.

According to the report, about 83 per cent of the UK’s storage capacity is taken up, compared to 50 per cent last year. Last Friday, day-ahead prices were 39.25 pence sterling per therm – the unit in which natural gas is sold – which was almost 41 per cent down since the beginning of the year and 37 per cent lower than this time in 2013.

According to Vayu's senior energy analyst, Joanne Daly, the significant year-on-year slide in wholesale prices is a result of the high storage stocks and depressed demand.

While she acknowledged that there was a spike in mid-June on the back of concerns about supplies coming from Russia, which provides large amounts of Europe's natural gas, Ms Daly said that there was no real upward pressure on prices.