UK GAS Prompt prices rise on colder weather, lower wind output

• Gas supply was robust, however, with flows from Norway increasing by 10 mcm day-on-day to 78 mcm on Wednesday, Gassco data showed.
• UK gas system was balanced, with demand and supply forecast at around 327 mcm, National Grid data showed.
• The March contract fell by 0.29 p to 22.81 p/therm, while the summer contract declined by 0.25 p to 24.10 p/therm.

LONDON: British prompt wholesale gas prices rose on Wednesday morning supported by colder weather and a drop in wind production.

The day-ahead contract rose by 0.40 pence to 25.30 pence per therm at 0825 GMT.

The within-day contract rose by 0.55 p to 25.25 p/therm.

Colder weather and reduced wind output helped lift prompt prices, a gas trader said.

Temperatures fell on Wednesday to 4.6 degrees Celsius, 1.4C below an earlier forecast, and were predicted to drop further on Thursday, before rising over the weekend, Refinitiv data showed.

As a result, residential consumption is expected to rise to 223 million cubic metres (mcm) on Thursday from 219 mcm on Wednesday, according to the same data.

Wind generation fell significantly on Wednesday, with lower wind output tending to lead to increase demand for gas in power generation.

Peak wind generation was forecast at 4.7 gigawatts (GW) on Wednesday compared to 13.7 GW on Tuesday and was expected to drop further to 3.5 GW on Thursday, Elexon data showed.

Gas-for-power demand was expected at 77 mcm on Wednesday, 24 mcm higher than predicted earlier, Refinitiv data showed.

Gas supply was robust, however, with flows from Norway increasing by 10 mcm day-on-day to 78 mcm on Wednesday, Gassco data showed.

LNG sendout also rose by 10 mcm to 120 mcm.

Storage withdrawals were expected to be 5 mcm higher than on Tuesday.

UK gas system was balanced, with demand and supply forecast at around 327 mcm, National Grid data showed.

Prices dropped on the curve, pressured by an overall abundance of gas supply in Europe, full storages and the potential of force majeure in China due to the coronavirus, the gas trader said.

The March contract fell by 0.29 p to 22.81 p/therm, while the summer contract declined by 0.25 p to 24.10 p/therm.

In the Dutch gas market, the day-ahead was 0.22 euro per megawatt hour lower at 9.58 euros/MWh.

The benchmark Dec-20 EU carbon contract was 0.04 euro lower at 23.38 euros a tonne.