UK GAS-Prices decline due to robust supply

UK GAS-Prices decline due to robust supply

British wholesale gas prices declined on Thursday because the market was oversupplied due to higher flows through Norway’s Vesterled pipeline into the St Fergus gas terminal.

By 0844 GMT, neither within-day nor day-ahead contracts had traded. Gas for next-month delivery was down 0.30 pence at 28.45 pence per therm.

Britain’s gas system was oversupplied by around 27 million cubic metres (mcm). Demand was forecast to be 173.5 mcm and flows were expected to be 200.2 mcm/day, according to National Grid data.

Norwegian exports through the Vesterled pipeline were higher and requests for gas from the UK Continental Shelf were at 144 mcm, up 10 mcm from actual flows on Wednesday.

“We forecast oversupply over the next few days (..) high exports through IUK (InterconnectorUK) will be necessary and also since medium-range storages are close to full,” said Thomson Reuters (Dusseldorf: TOC.DU – news) analysts.

Over the next two weeks, flows through Norway’s Langeled pipeline should decline due to several outages at Norwegian processing plants due to maintenance.

However, liquefied natural gas (LNG) supply should increase to 25-30 mcm/day in September due to several tankers which are possibly heading to Britain.

If LNG supply does rise there could be higher exports of gas to continental Europe by the end of next week as UK storage sites are nearly full, with only 180 mcm of capacity left, analysts added.

In the Dutch gas market, the day-ahead price at the TTF hub was 0.30 euros lower at 10.75 euros per megawatt hour.

Exports from Britain to the Continent should reach 444 gigawatt hours (GWh) on Thursday, up 46 GWh from the previous gas day.

In the European carbon market, front-year allowances were up by 0.05 euro at 4.66 euros a tonne.

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