Winter contracts displayed a significant increase on Friday as it was announced that the Rough storage facility will remain offline until March 2017 following a lengthy inspection. Rough accounts for 70% of the UKâ€™s storage capacity and the majority of the nationâ€™s back-up supply will now come in the form of more expensive imports from Europe. The lack of storage injections will result in a long system with surplus supply exported to Belgium via the IUK pipeline.
The Pound strengthened against the Euro yesterday as the Bank of England decided not to cut interest rates; this helped to pressure down gas contracts on the near-curve. Norwegian supply also increased which led to an oversupplied system and a jump in exports to Belgium. Meanwhile, a rise in oil and gas contracts offered support further along the curve.
The majority of gas contracts shed from their price on Wednesday as Brent decreased throughout the session following gains on Tuesday. The prompt was one of the exceptions to the downward movement as the UK gas system was short due to a rise in demand and weak Norwegian imports.
The UK gas system was short throughout yesterdayâ€™s session which resulted in downward movement on the near-curve, with a jump in oil prices supporting contracts further out. Demand rose by 14mcm compared to Mondayâ€™s levels following a rise in gas-fired power generation and colder temperatures, while UKCS flows were restricted by maintenance. Some of the gains at the front of the curve were slightly limited by a strengthening Pound.
Gas prices moved down on Monday as weaker oil prices and an improved supply/ demand outlook provided bearish pressure. Norwegian imports displayed a small increase as the return of the Kollsnes facility was offset by an outage at the Gulfaks field. The UK gas system was oversupplied throughout the session as wind generation reduced the need for gas-fired power generation.