Near-curve gas contracts decreased on Monday as supply levels improved and helped the system remain long throughout the session, with warmer weather also leading to weaker demand levels. Norwegian imports into the UK via the Langeled pipeline strengthened at the end of last week, while gas stocks are higher than expected. However, bearish movement further along the curve was slightly restricted by rising Brent.
A rising oil market supported contracts on the far gas curve on Friday, with a reported increase in demand fuelling bullish sentiment. Meanwhile, an expected rise in temperatures this week helped to restrict upward movement at the front of the curve, with improved supply levels also contributing to a long system.
The UK gas system was long throughout yesterdayâ€™s session which helped to weigh on near-curve gas prices. The Day-Ahead contract fell to its lowest price in 10 weeks as strong wind generation reduced the nationâ€™s need for gas-fired power generation. Further out, an increase in Brent in the afternoon helped to support some contracts with the help of a weakening Pound Sterling.
Gas contracts inched higher yesterday as a drop in Norwegian flows resulted in a short UK gas system, however gains on the far-curve were slightly restricted by weakening oil contracts. A warmer weather forecast for next week and a scheduled LNG delivery later in the month also helped to hold off the bulls.
Gas prices moved down yesterday as supply levels improved and temperatures are expected to increase at the weekend and over the course of next week. Cooler temperatures in the last week or so resulted in an increase in residential demand which should soften in the coming days, resulting in bearish movement on the near-curve. Meanwhile, flows via the St Fergus terminal increased by 10mcm and UKCS output should remain stable until Sunday at least.