Numerous gains could be observed across the gas curve on Thursday as a result of a very under-supplied system. Weaker coal and oil contracts provided some resistance further along the curve but short supply dictated the overall sentiment. Norwegian flows and UKCS production are lower due to outages, while a lack of deliveries has reduced LNG send-outs.
Weaker Norwegian flows and an increase in coal-fired power generation (on the back of higher cooling demand due to warm temperatures) lifted gas contracts on the near-curve yesterday. Elsewhere, there are no LNG deliveries scheduled to arrive in the UK until the 27th of July which resulted in a drop in send-outs, also offering further support to the curve.
The UK gas system remained short yesterday as an increase in gas-fired power generation and higher exports to Belgium lifted demand levels. Weaker UKCS and Norwegian flows also reduced supply levels, as did a drop in LNG send-outs; this helped towards gains on the near-curve. Further out, winter contracts displayed some decreases following strong upward movement on Friday.
The offshore Rough gas field, the UKâ€™s largest storage facility will not inject gas until spring 2017, with a high possibility that it could remain offline until autumn that year.
Winter gas prices displayed a downward correction yesterday following Fridayâ€™s surge; last weekâ€™s increase was a result of Centricaâ€™s announcement regarding the long-term outage at the Rough storage facility. However, contracts on the near-curve moved higher as the UK gas system fell short due to a rise in exports, weaker Norwegian flows, a drop in UKCS output and lower LNG send-outs.