Undersupplied systems across Western Europe supported gas contracts on Wednesday, although improved UKCS production restricted gains in the UK. Maintenance at Norwegian and Russian gas fields continued to create bullish pressure, although weaker oil helped to weigh on some contracts on the far-curve.
A limited wind and solar outlook helped to lift gas prices on Tuesday, with more expensive CCGT generation expected to make up the shortfall. LNG send-outs are also set to remain low in the short term and Norwegian production continued to experience issues, restricting flows into the UK and the rest of Europe.
Trading was limited yesterday due to the Bank Holiday, however, warmer weather and stronger coal prices helped European markets move higher. Supply remained tight, while a weakening Pound continued to support contracts.
Outages in the North Sea resulted in a balanced system yesterday, offering support to gas contracts. Flows via Langeled stood at 70mcm, however levels are expected to drop back to around the 40mcm norm next week which could result in strong undersupply. Meanwhile, the Pound continued to weaken and the outlook for oil was bullish due to the impending storm in the US.
Fresh outages at gas fields continued to impact UKCS production and imports from Norway yesterday, offering support to near-curve contracts. Oil prices also rallied higher and the Pound weakened, contributing to gains further along the curve.