Prices end 2021 on a losing streak as LNG flows ease supply concerns

Benchmark European and British wholesale gas prices ended 2021 with sharp losses after hitting record highs earlier this month, as warmer weather and supplies of liquefied natural gas (LNG) eased concerns over low Russian pipeline flows.

The British gas contract for same-day delivery fell 31 pence to 1.39 pounds per therm by 1300 GMT, as markets closed early for the New Year holiday.

The day-ahead contract was down 49 pence at 1.30 pounds/therm.

The British January contract traded down 61 pence and closed at 1.45 pounds/therm.

British gas markets will be closed on Monday, Jan 3.

The Dutch day-ahead contract was down 12 euros at 66.50 euros per megawatt hour (MWh).

The benchmark Dutch front-month contract was down 17.6 euros at 69.00 euros/Mwh, maintaining a losing streak since it recorded an intraday high of around 158 euros on Dec. 2. It is up 261.6% from its level on the same day last year.

The arrival of several LNG gas tankers sent prices down and helped to offset low exports from Russia.

Europe’s LNG imports for December were estimated at 9.1 million tonnes, the third highest month ever, and compared with 6.2 million tonnes in December 2020, Laura Page, senior LNG analyst at data intelligence firm Kpler, said.

The Yamal-Europe pipeline that usually delivers Russian gas to Western Europe was sending fuel back to Poland for an eleventh day on Friday, data from German network operator Gascade shows.

Gas traders expect prices to recover in January with cold weather expected in Europe and a possible recovery in Asian LNG demand might attract more cargoes from Europe.

“Next week will be generally unsettled with occasional windy days and temperatures near the normals. Higher elevations will see some light snow at times but a major colder than normal spell is not likely before mid-January at least,” Refinitiv meterologist Georg Muller said.

In other markets, the European benchmark December 2022 emission allowance (EUA) contract CFI2Zc1closed up 0.49 euros at 80.65 euros a tonne.
Source: Reuters (Reporting By Marwa Rashad; Editing by Kim Coghill and Jane Merriman)