UK GAS Prompt prices rise as system heavily undersupplied

• The day-ahead gas price at the Dutch TTF hub was down 0.60 euro at 13.60 euros per megawatt hour.
• The undersupply was caused by a sharp drop in sendout from LNG terminals.
• Wind generation is expected to be strong, at 12.5 Gigawatts on Monday and 13.3 GW on Tuesday.

LONDON: Prompt British wholesale gas prices rose on Monday morning supported by an strongly undersupplied gas system.

The day-ahead contract rose 0.15 pence to 33.50 p/therm by 0920 GMT.

The within-day contract traded flat to its Friday level at 34.00 p/therm.

The working-days-next-week (WDNW) rose 1.25 p to 33.25 p/therm.

The day-ahead is trading cheaper than the Summer 20 contract, which shows how oversupply caused by an LNG influx and mild demand this year reshuffled the usual price spreads in Europe.

On Monday the gas system was strongly undersupplied, with demand forecast at 297.8 million cubic metres (mcm) and supply at 253.7 mcm, National Grid data showed.

The undersupply was caused by a sharp drop in sendout from LNG terminals, which dropped by 39 mcm from Friday level.

Despite a drop in LNG sendout on Monday, those are likely to surge again, with seven more tankers signalling Britain as their destination on Monday.

A total of 20 tankers are expected in Britain by Jan. 1.

Britain was expected to export around 13 mcm to Belgium on Monday, further tightening the gas system.

Norwegian flows to Britain were expected to rise by around 10 mcm on Monday compared with day volumes, Gassco data showed.

Flows from the UK Continental Shelf were also predicted to increase by 14 mcm from the previous business day.

Wind generation is expected to be strong, at 12.5 Gigawatts on Monday and 13.3 GW on Tuesday, Elexon data showed, which usually reduces demand for gas in power generation.

Both residential and gas-for-power demand were expected to increase next week, supporting the WDNW contract.

The January contract was down 0.78 pence at 38.00 p/therm.

The day-ahead gas price at the Dutch TTF hub was down 0.60 euro at 13.60 euros per megawatt hour.

The benchmark Dec-19 EU carbon contract was down 0.36 euro at 24.58 euros per tonne.