UK GAS-Prices fall as supply risks diminish
British gas prices fell on Tuesday morning, paring the past week’s gains as some supply risks diminished, but uncertainty on energy markets kept traders on tenterhooks.
* Day-ahead gas fell 0.25 pence to 30.50 pence/therm by 0850 GMT.
* Within-day gas was down 1.15 pence at 29.85 p/therm.
* Prices dropped after a strong rise in the past week prompted by factors including a requirement for Gazprom to reduce flows via the OPAL pipeline, French nuclear concerns, as well as the oil price jump on Monday after attacks on Saudi Arabia’s processing facilities.
* On Tuesday, Brent crude, carbon and coal traded lower, with bearishness spreading to gas markets.
* Russian flows via the OPAL pipeline into Europe were up by 69 GWh/day on Tuesday, compared with Monday, a higher level than expected. Gazprom started to reduce OPAL flows on Saturday.
* “The last few days’ upside was again an overreaction and we should see some risk abate,” said a source in the UK gas market.
* However, uncertainty remains high as traders await the results of an investigation into French nuclear reactor problems.
* The oil market also remains on high alert to the threat of a military response to attacks on Saudi Arabian crude oil facilities.
* The British gas system was slightly undersupplied on Tuesday, with supply expected at 158.5 million cubic metres (mcm) and demand at 160 mcm, National Grid data showed.
* Wind generation is expected to drop to 2.5 gigawatts (GW)on Wednesday from 5.8 GW on Tuesday, meaning more gas may be needed for power generation, Elexon data showed.
* This has been reflected in a limited drop in the day-ahead contract.
* The working-days-next-week product dropped significantly on Tuesday as Norwegian gas flows are expected to rise next week following maintenance, another bearish factor.
* The UK October gas contract fell by 0.50 pence to 38.80 pence per therm.
* Day-ahead gas at the Dutch TTF hub fell by 0.20 euro to 11.00 euros per megawatt hour (MWh)
* The Dutch month-ahead gas contract fell by 0.38 euro to 14.85 euros/MWh.
* The benchmark Dec-19 EU carbon contract dropped by 0.35 euros to 26.69 euros a tonne
Source: Reuters (Reporting by Ekaterina Kravtsova; Editing by Pravin Char)