Healthy supply levels and a lower demand forecast helped to weigh on prompt gas contracts yesterday. Gas demand fell by 22mcm and the system was oversupplied throughout the session, with a milder weather outlook and the Easter holidays expected to reduce levels further. The LNG outlook is also comfortable with four deliveries expected to dock in the UK over the next ten days.
A milder weather outlook and improved LNG send-outs led to downward movement across the near gas curve on Friday, with weaker oil weighing on contracts further out. Four LNG deliveries are expected to arrive in the UK before the end of March which pressured down the prompt, helped by a weaker demand forecast for the weekend.
Gas prices increased yesterday morning as a number of unplanned outages reduced flows into the UK, however there was some downward movement in the afternoon as storage withdrawals helped to balance the system. The gains were more prominent on the far-curve rather than the prompt with further upward pressure coming from rising Brent.
Low wind production resulted in a rise in gas-fired power generation on Tuesday which lifted demand levels, leading to a series of gains across the near gas curve. However, contracts further along the curve continued to soften with a bearish oil market the main influencing factor.
The UK gas system was balanced yesterday despite a drop in LNG send-outs as the Bacton Seal terminal returned online which improved UK production; this helped contracts across the near-curve post losses. Contracts also softened further along the curve as oil and coal prices displayed a decrease.