The price of natural gas on UK markets fell to its lowest level in months this week, likely reducing the amount the government will need to spend on extended energy bill support.
Anticipated gas prices for November were trading at 183 pence per therm, or unit of heat, on Monday, according to data from exchange and clearing house Intercontinental Exchange; 77 per cent below this year’s peak.
Prior to the outbreak of war in Ukraine, the UK price of gas was already rising due to factors such as a long winter and a shortage of storage in Europe. It then shot up sharply in February this year following the Russian invasion, peaking this August at almost 800 pence per therm on futures prices.
This trend has translated into rising energy bills for UK households and the government has guaranteed that for the next six months a typical bill for average energy consumption will not rise about £2,500 per year. After April, bills are then projected to surge to £4,347 and the treasury has said it will explore options for more targeted forms of support.
If gas prices remain at this new low or fall further still, those options would cost less to deliver, according to financial services company ING. But forecasters also warn that downward pressures on gas prices are likely to be temporary, with ING predicting that gas prices will be higher next winter compared to this one.