The morning session was generally stable but small losses were recorded in the afternoon following a drop in oil prices and a warm weather outlook for today. A number of LNG deliveries are also expected to dock in the UK in the coming days and helped to counter the effects of a short system.
It was announced yesterday that production at the Groningen gas facility would be cut by 10%, falling from 24bcm to 21.6bcm; additional restrictions will also be placed on output in colder years. This news offered some support to the curve later in the session but a warm weather outlook and the expected arrival of LNG deliveries in the coming week helped to restrict any gains.
Gas prices initially opened at a discount but rallied higher throughout the session on the back of stronger coal and oil markets. Meanwhile, the UK gas system was oversupplied following a rise in Norwegian flows and improved LNG send-outs at the South Hook terminal, weighing on the prompt. The market now awaits Thursday’s OPEC meeting, while on-going issues in Australia helped APi2 coal to hit its highest price since October 2014.
Gas prices displayed mixed changes on Monday with contracts on the near-curve recording a loss, while those further out strengthened. Temperatures have been revised higher for the next few days which weighed on prompt prices, while supportive coal and oil markets contributed to gains further out. The UK gas system remained oversupplied but Norwegian flows decreased during the session due to an unplanned outage.
Near-curve gas prices moved down on Friday as the supply outlook for this week was much improved. Norwegian flows are set to increase, milder temperatures should reduce demand levels and a number of LNG deliveries are expected to dock in Europe over the next few days. Far-curve contracts were more stable as coal and oil markets continued to provide support.