LONDON: Natural gas and power prices in Britain dropped on Monday morning as mild weather and a rise in imports of Norwegian gas and in power generation capacity left the system well supplied.
Gas prices for delivery within the day were trading at 49.25 pence per therm at 0830 GMT, down 0.75 pence since their last close, and prices for delivery on Tuesday were down 0.55 pence to 49.20 pence a therm.
The lower prices were largely a result of a rise in Norwegian supplies on Monday to their highest levels since May.
"Fundamentals are bearish this morning as the system is long, because there is a big rise in Norwegian imports as well as increased British production, resulting in too much gas in the system," one gas trader said.
The oversupplied system, as well as a possible solution to the Russia-Ukraine gas crisis, also led to lower prices for winter gas deliveries, which fell 0.8 pence per therm to 56.70 pence.
"Further confirmation regarding the resolution of the Ukraine-Russia gas dispute is expected from the talks tomorrow, limiting the potential for upside, though any news from Berlin will likely see substantial movements in prices," said Marcel Boonaert, head of trading and portfolio at gas supply company Wingas UK.
The European Union moved closer to brokering a deal between Ukraine and Russia last Friday that would supply Kiev at least 5 billion cubic metres of gas to help prevent a winter shortfall, which Moscow said hinged on Ukraine making pre-payments. It resulted in a 5 percent fall in winter gas prices.
Wholesale power prices in Britain also fell along with cheaper gas as well as improved generation capacity, with prices for baseload (24 hours) delivery on Tuesday down 2.7 pounds per megawatt-hours (MWh) to 43 pounds a MWh.
Britain's 550 megawatt Dungeness B-21 nuclear reactor returned to the power grid on Sept. 27 after an unplanned outage, operator EDF Energy said on Monday.
Additionally, wind power capacity was expected to rise from 500 megawatts to 1,500 megawatts between Monday and Tuesday, while demand was expected to remain relatively low due to mild weather, which is forecast to last into the first week of October.
Comments
Comments are closed for this article.