UK prompt gas prices finally eased Thursday ahead of milder weather forecast for this weekend, potentially allowing the injection of gas into long range storage and a brief recovery period for the system as a whole, traders said.
UK within-day gas prices were 1.65 pence a therm lower on the day at 62.50 p/th by midday London time, while gas for next-day delivery was 1.65 p/th lower at 61.35 p/th.
"Temperatures are expected to rise back to seasonal norms over the weekend, which could give storage facilities some respite to re-inject and less pressure on a tight gas supply system. However, these temperatures could be short-lived as there are forecasts that this may be followed by another cold snap fed from Siberia," a trader said.
"Forecast demand has reduced on the back of slightly warmer temperatures, ahead of this weekend. Demand has remained higher than seasonal norms and flows from Langeled and Rough have remained healthy. However, supply from South Hook LNG terminal is more subdued," the trader added.
Temperatures are currently 6 degrees Celsius below the seasonal average if 3-8 degrees Celsius in London Thursday, but will increase to 2-3 degrees Celsius below normal at the weekend, the latest Customweather forecast showed.
National Grid data showed the system was only around 5 million cubic meters short on gas by lunchtime, with supply at 423 million cu m/d and demand at 428 million cu m/d--21% higher than the seasonal average, down from 27% Wednesday.
As flows of gas from Norway through the Langeled pipeline remained around 70 million cu m/d and Rough storage continued to be withdrawn at a rate of 45 million cu m/d, the shortness came from a 17 million cu m/d reduction in medium range withdrawals as the Hornsea facility only left flowing at 1 million cu m/d.
LNG flows were also 20 million cu m/d lower in total at 65 million cu m/d, with South Hook flows at 35 million cu m/d, Isle of Grain at 30 million cu m/d, while Dragon LNG flows stopped. The Al Thumama is still expected to arrive at Grain Thursday and the Al Safliya to South Hook on December Saturday.
Traders said that nominated flows to the UK via the Interconnector are also lower this morning, and data showed flows were at 10 million cu m/d compared with 31 million cu m/d at close Wednesday.
Meanwhile prices on the near curve were also bearish, with the front-month down 1.25 p/th on the day at 59.25 p/th and the front-quarter at 58.70 p/th, 1.30 p/th lower as the milder conditions eases pressure on the gas supply system, also lowering the front-season by 0.55 p/th to 53.05 p/th.
However, traders said longer dated contracts fell late in Wednesday's session in line with a weaker oil market, recovering at open Thursday.
"Oil prices have rebounded this morning, after a reports showed that oil stockpiles had declined more-than-expected, suggesting that demand is recovering. As such Winter 2011 opened stronger than last night's close," a trader said.
Gas for delivery in winter next year hadn't traded by lunchtime but was offered at 61 p/th.
UK within-day gas prices were 1.65 pence a therm lower on the day at 62.50 p/th by midday London time, while gas for next-day delivery was 1.65 p/th lower at 61.35 p/th.
"Temperatures are expected to rise back to seasonal norms over the weekend, which could give storage facilities some respite to re-inject and less pressure on a tight gas supply system. However, these temperatures could be short-lived as there are forecasts that this may be followed by another cold snap fed from Siberia," a trader said.
"Forecast demand has reduced on the back of slightly warmer temperatures, ahead of this weekend. Demand has remained higher than seasonal norms and flows from Langeled and Rough have remained healthy. However, supply from South Hook LNG terminal is more subdued," the trader added.
Temperatures are currently 6 degrees Celsius below the seasonal average if 3-8 degrees Celsius in London Thursday, but will increase to 2-3 degrees Celsius below normal at the weekend, the latest Customweather forecast showed.
National Grid data showed the system was only around 5 million cubic meters short on gas by lunchtime, with supply at 423 million cu m/d and demand at 428 million cu m/d--21% higher than the seasonal average, down from 27% Wednesday.
As flows of gas from Norway through the Langeled pipeline remained around 70 million cu m/d and Rough storage continued to be withdrawn at a rate of 45 million cu m/d, the shortness came from a 17 million cu m/d reduction in medium range withdrawals as the Hornsea facility only left flowing at 1 million cu m/d.
LNG flows were also 20 million cu m/d lower in total at 65 million cu m/d, with South Hook flows at 35 million cu m/d, Isle of Grain at 30 million cu m/d, while Dragon LNG flows stopped. The Al Thumama is still expected to arrive at Grain Thursday and the Al Safliya to South Hook on December Saturday.
Traders said that nominated flows to the UK via the Interconnector are also lower this morning, and data showed flows were at 10 million cu m/d compared with 31 million cu m/d at close Wednesday.
Meanwhile prices on the near curve were also bearish, with the front-month down 1.25 p/th on the day at 59.25 p/th and the front-quarter at 58.70 p/th, 1.30 p/th lower as the milder conditions eases pressure on the gas supply system, also lowering the front-season by 0.55 p/th to 53.05 p/th.
However, traders said longer dated contracts fell late in Wednesday's session in line with a weaker oil market, recovering at open Thursday.
"Oil prices have rebounded this morning, after a reports showed that oil stockpiles had declined more-than-expected, suggesting that demand is recovering. As such Winter 2011 opened stronger than last night's close," a trader said.
Gas for delivery in winter next year hadn't traded by lunchtime but was offered at 61 p/th.
