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UK GAS-Prices rise in undersupplied market as LNG supply dips

Prompt British wholesale gas prices edged higher on Monday as lower output from liquefied natural gas (LNG) terminals and strong demand for heating left the market undersupplied.

* The within-day contract was up 0.52 pence at 27.77 p/therm by 0920 GMT.

* The day-ahead contract was up 0.15p at 27.75p/therm.

* Traders said a drop in send-out from the country’s LNG terminals had combined with expectations of higher demand as temperatures turn cooler, boosting prices.

* LNG supply was expected at around 70 million cubic metres (mcm), down 53 mcm from the previous day, Refinitiv Eikon data showed.

* The UK gas system was 23.4 mcm undersupplied, with demand forecast at 291.7 mcm and supply at 268.3 mcm/day, National Grid data showed.

* Forecasts for cooler weather on Tuesday also led to expectations of higher local distribution zone (LDZ) gas demand for heating.

* “Temperatures tomorrow should (dip) below seasonal normal before increasing again on the coming days,” Refinitiv analysts said in a daily research note.

* “As a result, LDZ consumption is forecast to increase further to 253mcm/day on DA (day-ahead), this is 20mcm/day up compared to the previous forecast,” the analysts said.

* Further out on the curve prices also rose.

* The February contract < TRGBNBPMG0> was up 0.05p at 27.30p/therm.

* The Summer 2020 contract < TRGBNBPSU0> was up 0.30p at 26.00p/therm.

* The month-ahead gas price at the Dutch TTF hub was down 0.05 euro at 10.55 euros per megawatt hour.

* The benchmark Dec-20 EU carbon contract was down 0.27 euro at 24.10 euros per tonne.
Source: Reuters (Reporting by Susanna Twidale; Editing by Alexander Smith)

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