UK GAS Falling demand drags prompt prices down

• Gas-for-power demand is expected to drop significantly over the weekend due to a rise in wind generation.
• Liquefied natural gas (LNG) sendout dropped by 26 mcm to 113 mcm on Wednesday due to lower flows from the Isle of Grain terminal.
• Two tankers are expected at the terminal, with 11 more due to arrive at Milford Haven terminals.

LONDON: Prompt British wholesale gas prices dropped on Wednesday morning as rising temperatures were expected to reduce gas demand.

The day-ahead contract was down 0.35 pence to 27.60 p/therm at 0915 GMT.

The within-day contract was down 1.00 pence at 27.50 p/therm.With temperatures expected to rise above the season's norm on Wednesday, gas demand for heating was forecast to decrease.

Temperatures in Britain are forecast to average at 6.2 degrees Celsius on Wednesday, 2.8 degrees C higher than on Tuesday, Refinitiv data showed. Next week, temperatures are expected to average 7 degrees C.

As a result, residential gas consumption is expected to be 19 million cubic metres (mcm) below an earlier forecast on Wednesday and is also expected to decrease on Thursday and over the weekend.

Gas-for-power demand is expected to drop significantly over the weekend due to a rise in wind generation.

But on Wednesday and Thursday peak wind generation was expected to remain subdued, at 3 gigawatts (GW) and 4.1 GW, respectively, Elexon data showed.

Britain's gas system was still undersupplied by 13 mcm on Wednesday, with overall demand forecast at 323.8 mcm and supply at 310.8 mcm/day, National Grid data showed.

On the supply side, flows from Norway to Britain increased by 9 mcm to 80 mcm on Wednesday, compared with Tuesday, after an unplanned outage at the Oseberg gas field ended, Gassco data showed.

Liquefied natural gas (LNG) sendout dropped by 26 mcm to 113 mcm on Wednesday due to lower flows from the Isle of Grain terminal.

Two tankers are expected at the terminal, with 11 more due to arrive at Milford Haven terminals.

The drop in flows from Isle of Grain was a response to reduced gas demand on Wednesday and resulted in a looser market, compared to Tuesday, Refinitiv analysts said in a morning report.

Flows from the UK Continental Shelf were stable day-on-day in the morning, with the Culzean field ramping up production after an outage.

However, the Bruce platform gas export system is unavailable and an investigation into the issue is ongoing, GB Remit said in an update in the morning. The outage is impacting 5.9 mcm per day.

The February contract was 0.50 p down at 27.35 p/therm.

The day-ahead gas price at the Dutch TTF hub  was 0.30 euro down at 10.65 euros per megawatt hour.

The benchmark Dec-20 EU carbon contract was up 0.37 euro at 25.29 euros per tonne.