Gas contracts moved higher on Friday with support coming from a rise in oil prices, although upward movement on the prompt was slightly restricted by a weaker demand outlook for this week. Supply levels were also comfortable with numerous LNG deliveries expected to arrive in the UK which helped to curb gains on the rest of the near-curve.
Stronger demand levels in the UK, as a result of cold weather offered support to gas contracts yesterday but overall movement on the near-curve was bearish due to a healthy supply picture. Numerous LNG deliveries are expected to arrive in the UK next week which has led to increased send-outs, while flows from Europe also remained high. Further along the curve contracts took direction from rising Brent and posted gains.
Gas demand remained high yesterday as temperatures were below average, however, the gas system was oversupplied due to improved LNG send-outs. LNG flows rose from 41mcm to 57mcm with numerous deliveries expected to dock in the UK over the next week. Norwegian and Dutch imports into the UK were also higher and this healthy supply picture helped to weigh on contracts on the near-curve, with a drop in oil weighing on far-curve prices.
A cold weather forecast for the rest of the week continued to apply bullish pressure to the gas curve yesterday with most contracts displaying a gain. However, supply levels remained comfortable despite rising demand which helped to limit the upward movement, with weaker oil also weighing on the far-curve.
Temperatures are expected to remain below average until the end of the week at least which offered support to near-curve gas contracts yesterday. Supply levels remained comfortable but stronger demand tightened the system. Further along the curve prices took direction from rising oil contracts.