UK GAS-Weakening gas demand drives prompt prices down

• Temperatures across Britain are expected to average above the season's norm in the next two days.
• Gas demand for heating is expected to drop to around 196 million cubic metres (mcm) on Thursday from 233 mcm on Wednesday.
• The British January gas contract was up 0.30p at 38.10 p/therm.

British wholesale gas prices fell on Wednesday morning as gas demand is expected to fall during the warmer weather.

The day-ahead contract fell 1.00 pence to 32.00 p/therm by 0940 GMT.

The within-day contract fell 1.95 pence to 31.75 p/therm.

Temperatures across Britain are expected to average above the season's norm in the next two days, reducing gas consumption.

On Thursday, average temperatures are forecast at 9.7 Celsius, 5.4 C higher than an earlier prediction, Refinitiv data showed.

Gas demand for heating is expected to drop to around 196 million cubic metres (mcm) on Thursday from 233 mcm on Wednesday.

Wind generation is forecast at 13.4 gigawatts (GW) out of 15.3 GW capacity on Wednesday and Thursday, Elexon data showed, with strong wind generation tend to reduce gas-for-power-demand.

Total gas demand fell slightly below the season's norm on Wednesday to 312.1 mcm, National Grid data showed.

Britain's gas market was almost balanced, with supply expected at 309.5 mcm.

Flows from Norway were 1 mcm lower on Wednesday morning compared with Tuesday volumes and liquefied natural gas (LNG) sendout fell by around 3 mcm.

LNG sendout could rise to accommodate the busy cargo arrival schedule, Refinitiv analysts said.

Flows from UK Continental Shelf rose by 2 mcm at 140 mcm.

An outage at Barrow gas treatment plant that started on Tuesday continued on Wednesday, and is expected to impact 5.58 mcm of supply per day until 1500 GMT, GB Remit data showed.

Trading activity on curve contracts was scarce.

On Tuesday, the U.S. Senate passed legislation to place sanctions on companies building the Nord Stream 2 pipeline from Russia to Germany, a bullish factor for curve products.

Russia's Deputy Prime Minister Dmitry Kozak said last month Nord Stream 2 was expected to begin operations in mid-2020, but Gazprom said the timing will depend on the weather.

The British January gas contract was up 0.30p at 38.10 p/therm.

The day-ahead gas price at the Dutch TTF hub  fell 0.30 euro to 12.90 euros per megawatt hour (MWh), while the January contract traded 0.15 euro higher at 14.55 euro/MWh.