Near-curve gas prices moved higher on Friday afternoon following a downward revision in temperatures for February. However, the prompt shed from its price as mild weather and healthy wind levels were expected to continue at the start of this week and Norwegian supply was set to improve. Further along the curve, most contracts moved down with little support provided by fuel markets.
A weaker LDZ demand outlook in the short term continued to act as the main market driver for the near-gas curve yesterday and the majority of contracts stabilised. Meanwhile, the system was long despite further UKCS constraints and low Norwegian flows. Further out, prices displayed little movement as a bullish oil market provided support.
Weaker demand levels are expected over the next week or so as temperatures are set to remain mild. UKCS production also increased as a number of outages were resolved, helping towards an oversupplied system. Further out, any bearish movement was limited by a strengthening oil market.
The mild weather outlook for January and February continues to apply bearish pressure to the near-curve. However, any losses were limited by a drop in supply as unplanned outages reduced Norwegian and UKCS flows into the UK. Prices further along the curve held firm as a bullish oil market offered continued support.
Comfortable wind generation reduced CCGT demand yesterday, while milder weather resulted in a drop in residential demand, offsetting the effects of a short system and helping near-curve gas prices move down. Unplanned outages restricted some of the losses, while bullish oil provided upward pressure on the far-curve.