This week with gas prices in the UK and EU continuing to ease, the summer/winter25 spread has come crashing down since its peak last month. Why is this important? Normally, prices in the summer are cheaper due to lower demand incentivising storage injections. However, in recent months the summer has been more expensive than winter causing reluctance from market participants to inject into storage facilities amid financial losses. With the spread reversing to “normal” levels is this a genuine market signal? Yesterday the EU have said they plan to relax its gas storage refilling targets and wants to give countries greater flexibility over when and how much storage to build up, according to the FT. The European Commission did not provide further details on its plan, and it was not clear whether the changes discussion would go into effect for 2025. With storage levels at 40% fullness, there will be additional demand this summer despite easing regulations. Has the sell off been exhausted or is there this more to come out of the market? For energy buyers the recent fall in prices may serve an opportunity to start hedging future periods should they be exposed.
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