UK GAS Prices plunge as weak LNG prices add pressure to oversupplied market

• China National Offshore Oil Corp (CNOOC) has declared force majeure on prompt LNG deliveries from at least three suppliers.
• Peak wind power generation is forecast at 3.7 gigawatts (GW) on Thursday soaring to 12.4 GW on Friday.
• The day-ahead contract was down 1.80 pence at 23.00 p/therm.

LONDON: Prompt British wholesale gas prices dropped on Thursday with the market oversupplied and as weak liquefied natural gas (LNG) prices added to bearish sentiment.

The within-day contract was down 2.35 pence at 22.75 p/therm, as of 0906 GMT.

The day-ahead contract was down 1.80 pence at 23.00 p/therm.

Traders said the falls were due to an oversupply of gas and exacerbated by LNG markets, where prices have slumped due to warmer-than-usual winter temperatures and the coronavirus outbreak.

Asian and India LNG prices hit unusually low levels of below $3 per million British thermal units (mmBtu) this week, but analysts said it was still unclear how much impact the coronavirus is likely to have on energy markets.

"This (the virus) could certainly post further bearish risks to European gas prompt prices as the global LNG oversupply would grow even more if Chinese importers would declare force majeure," analysts at ELS Analysis said in research note.

China National Offshore Oil Corp (CNOOC) has declared force majeure on prompt LNG deliveries from at least three suppliers, two sources told Reuters on Thursday.

Britain's gas system was oversupplied by 12.7 million cubic metres (mcm) with demand forecast at 329.9 mcm and flows at 342.6 mcm/day, National Grid data showed.

Peak wind power generation is forecast at 3.7 gigawatts (GW) on Thursday soaring to 12.4 GW on Friday, Elexon data showed.

Demand for gas from power stations was expected to plummet on Friday, with analysts at Refinitiv forecasting day-ahead gas for power demand at 45 mcm, down 31 mcm from Thursday.