Gas prices moved higher Friday morning as an outage at the South Hook LNG terminal reduced supply levels in the UK. However, the outage was resolved in the afternoon and a milder weather forecast helped contracts to shed from their price, with further bearish pressure coming from an oversupplied system.
An oversupplied gas system helped gas prices to decrease yesterday as demand levels were below average due to milder weather and BBL flows resumed. Residential demand was 22% below the seasonal norm, while BBL flows rose to around 12mcm. Losses were also evident further along the curve with further downward pressure coming from weaker fuel prices.
Maintenance in Norway continued to restrict flows in to the UK but above average temperatures and strong LNG supply resulted in a long gas system, contributing to losses across the near-curve. However, the downward movement was restricted by a halt in BBL flows and an increase in gas-fired power generation, while stronger oil and coal supported the far-curve.
Gas prices displayed downward movement yesterday as the UK gas system was 5mcm long despite scheduled maintenance restricting flows via the St Fergus terminal, reducing output by 19mcm. A drop in residential demand contributed to Tuesdayâ€™s oversupply, as did an increase in LNG send-outs. Meanwhile, weaker oil and coal prices applied bearish pressure further along the curve.
3rd November 2015 | Posted by: James Turner | Market Analysis
Although the temperatures dropped yesterday, the rest of the week is forecast to get warmer. It is this mild weather forecast along with strong supply that has pushed gas prices down again. A falling oil price has added bearish pressure also.