UK GAS-Prices decline amid oversupply

LONDON: British wholesale gas prices declined on Tuesday morning as higher flows through the Langeled pipeline offset a drop in FLAGS pipeline supply due to maintenance.

The day-ahead contract was down by 0.50 pence at 19.50 pence per therm from the previous settlement by 0731 GMT.

Within-day contract was 0.45 pence lower at 19.30 p/therm.

The system was oversupplied by around 7 million cubic metres (mcm), with demand forecast at 150 mcm and flows at 157 mcm/day, National Grid data shows.

Flows through the Langeled pipeline from Norway are at 34 mcm compared to 20 mcm yesterday.

This has offset a drop in flows from the FLAGS pipeline in the North Sea which went on an outage a day earlier than planned today.

High temperatures should continue in Britain over the next few days, increasing demand for cooling, but later this week they should start to gradually decline, falling below the seasonal norm over the next couple of weeks, according to Refinitiv analysts.

In Europe, the forecasted number of days where the temperature is high enough for consumers to turn air conditioning has been well above the ten-year average, analysts at Societe Generale said.

Wind output remains low, which typically increases gas-for-power demand.

Peak wind generation is forecast at around 2.6 gigawatts (GW) for the next two days, Elexon data shows, out of a total metered capacity of around 18 GW.

The month-ahead contract was down 0.29 pence at 20.60 p/therm.

In the Dutch gas market, the September price at the TTF hub inched down by 0.06 euro to 7.51 euros per megawatt hour.

The benchmark Dec-20 EU carbon contract was 0.33 euro higher at 27.04 euros a tonne.