UK GAS-Prices drop amid falling demand and bearish energy prices

LONDON: British wholesale gas prices dropped on Wednesday morning amid falling demand and a dip in wider energy prices.

The day-ahead contract fell by 1.30 pence to 11.10 p per therm at 0909 GMT.

The within-day contract fell by 0.70 p to 11.50 p per therm.

UK gas demand is expected to go down amid higher temperatures and stronger wind, with renewable generation forecast up on Thursday from today's low, Refinitiv analysts said in a morning note.

The bearish energy complex, with oil and carbon emission prices falling, was also putting pressure on gas prices, a trader said.

Peak wind generation was forecast to increase to 8.7 gigawatts (GW) on Thursday from 4.9 GW on Wednesday, Elexon data showed.

As a result, gas-for-power demand is expected to drop to 33 million cubic metres (mcm) on Thursday from 58 mcm on Wednesday, Refinitiv data showed. The forecast for both days was revised down.

Local distribution zone (LDZ) demand is forecast to drop to 84 mcm on Thursday from 88 mcm on Wednesday as temperatures are expected to rise from Thursday.

Flows from Norway via the Langeled pipeline which were at zero on Tuesday resumed last night, flowing at 7 mcm, Refinitiv data showed, while UK exports to continental Europe via the Interconnector UK and BBL pipelines reduced.

A healthy amount of liquefied natural gas (LNG) delivered to Britain is also having a bearish impact on prices, the trader said.

The July contract was down 0.59 p at 11.43 p/therm.

The day-ahead gas price at the Dutch TTF hub was down 0.15 euro at 4.50 euros per megawatt hour.

The benchmark Dec-20 EU carbon contract was down 0.22 euro at 22.26 euros per tonne.

Brent crude fell 70 cents to $40.48 a barrel after a report showed a rise in crude inventories in the United States.