UK GAS-Prices fall as LNG keeps coming, storage close to full
British wholesale gas prices fell on Monday as robust supplies through pipelines and from liquefied natural gas (LNG), coupled with expectations of milder weather, created over-supply.
* Within-day gas price was 0.65 lower at 65.00 pence per therm at 0855 GMT, while the day-ahead contract fell by 1.25 pence to 65.25 p/therm
* Gas for December delivery was 1.45 pence lower at 65.90 p/therm
* The gas system was oversupplied by 21 million cubic metres (mcm), with supplies forecast at 324.1 mcm and demand seen at 303.5 mcm
* Supplies remained robust at 232 mcm in the absence of any major disruptions or maintenance from both the North Sea Continental Shelf and through the Langeled pipeline from Norway
* Send-out from LNG terminals is forecast at 65 mcm with at least four LNG tankers due to arrive this week
* LNG deliveries to Britain this month have reached their highest point since September 2016 at 1.8 mcm, or 0.826 million tonnes
* Temperatures are expected to double between Monday – at 4.9 degrees Celsius – and at the weekend at 9.9C
* The longer-term weather outlook also shows a milder December, according to Refinitiv Eikon
* This will has cut demand forecasts by 15 mcm to 214 mcm for Monday and by 34 mcm to 161 mcm by the weekend
* In addition, peak wind generation is close to full capacity at 11.3 gigawatts (GW) on Tuesday, which will reduce gas-for-power demand
* Gas storage is high at 1,310 mcm compared to capacity of 1,450 mcm, according to Refinitiv data.
* “There is substantial risk that current dynamics will lead to storage injection demand by the end of this week. This is not feasible given current inventory,” said Refinitiv gas analyst Oliver Sanderson
* Instead, supply would need to be cut along the BBL pipeline from the Netherlands, the Vesterled and Langeled pipelines from Norway or from LNG deliveries themselves, he said.
* In the Dutch gas market, the day-ahead gas price at the TTF hub fell by 0.50 euro to 24.35 euros per megawatt hour
* Benchmark Dec-18 EU carbon contract was down 0.39 euro at 19.82 euros a tonne
Source: Reuters (Reporting by Sabina Zawadzki; editing by Nina Chestney)