UK GAS-Prices fall before start of summer gas season
British wholesale gas prices fell on Friday morning before the start of the summer gas season next week, amid oversupply and mild temperatures.
* On the prompt, gas for immediate delivery was down 1.50 pence at 35.25 pence per therm and weekend gas was 0.60 p lower at 35.40 p/therm at 0936 GMT.
* The system is oversupplied with demand forecast at 218.3 million cubic metres (mcm) and flows at 227.8 mcm/day, National Grid data shows.
* Average daily temperatures in Britain are expected to be 8.2 degrees Celsius on Friday but are forecast to fall to 5.6 C by next week.
* Further along the curve, the April contract was down 0.34 p at 13.93 p/therm. The summer 2019 contract, expiring on March 31, was 0.50 p lower at 36.10 p/therm.
* UK gas prices have fallen by around 40 percent since the beginning of this quarter.
* April 1 marks the start of the so-called summer gas season, in which there is typically lower demand for heating and more injections into storage when prices are lower.
* However, storage levels are already high as unprecedented volumes of liquefied natural gas (LNG) have come to northwest Europe in the first quarter.
* Asian spot prices for LNG have fallen to their lowest in nearly three years, driven by excess supply and a lack of buying in Asia, driving cargoes West.
* “Storage levels are now settling at around 40 percent, twice as large as those recorded one year ago. The climate spread is also supportive of an increase in gas demand (relative to coal),” said Giacomo Masato, research analyst at Marex Spectron.
* The year-on-year storage overhang in Europe is forecast to end March at more than 24 billion cubic metres, consultancy Energy Aspects said.
* Dutch gas prices have fallen to a level at which gas-fired generation is more economic than coal and the gap between Dutch and U.S. gas prices is narrowing, which could make it less attractive for U.S. LNG to come to Europe, Energy Aspects added.
* Day-ahead gas at the Dutch TTF hub was 0.30 euro lower at 13.90 euros a tonne. Q2 gas was 0.37 euro lower, also at 13.90 euros/tonne.
* The benchmark Dec-19 EU carbon contract was down 0.09 euro at 22.17 euros per tonne.
Source: Reuters (Reporting by Nina Chestney; additional reporting by Lefteris Karagiannopoulos and Nerijus Adomaitis; Editing by Dale Hudson)