Irish wholesale gas prices have dropped 26% since the beginning of the year, according to energy supplier Vayu.

The natural gas supply deal reached between Russia and Ukraine has resulted in significant downward pressure on wholesale gas prices being traded today.

When markets closed on Friday, wholesale market contracts for next-day delivery were down 26% since the start of year, trading at 49.1p.

Meanwhile, prices for within-day gas delivery are down 10% since markets opened on Friday and contracts for delivery during the first quarter of 2015 are down 2%.

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The deal, which will see Russia resume natural gas supplies into Ukraine during the winter period was brokered late on Thursday during tripartite talks between Russia, Ukraine and the EU. The deal means that Russian gas supplies delivered into other European countries via Ukraine are now more secure which is of significant importance given Russia provides approximately a third of EU's gas demand, with half of that coming via Ukraine.

Joanne Daly, Senior Energy Analyst at Vayu said: "Since Russia stopped supplying Ukraine, the markets had factored a significant risk premium into wholesale gas prices at all major European gas hubs, including the UK wholesale gas market – which is the major source of gas supply into Ireland. With a deal now agreed between Russia and Ukraine, concern over winter supply is greatly reduced and we’re seeing a drop in prices in line with this with all contracts traded so far today falling in value."

(CD/MH)