Prompt prices climb slightly on higher gas-for-power demand

British prompt wholesale gas prices edged up on Tuesday morning. The rise was limited due to full storage and
24 Sep, 2019
  • British prompt wholesale gas prices edged up on Tuesday morning.
  • The rise was limited due to full storage and expectations of an increase in liquefied natural gas (LNG) send-out in October.
  • * Britain's gas system was almost balanced, with demand forecast at 165.1 million cubic metres and supply at 164.8 mcm, National Grid data showed.

* The day-ahead contract was unchanged from Monday's close as of 0825 GMT, fetching 26 pence per therm, having traded higher earlier in the session.

* The within-day contract rose by 0.75 p to  27.00 p/therm.

* Britain's gas system was almost balanced, with demand forecast at 165.1 million cubic metres and supply at 164.8 mcm, National Grid data showed.

* Prompt prices are being driven by higher forecasts of gas-for-power demand, Refinitiv said in a morning note.

* The gas-for-power demand forecast is 4 mcm higher for Tuesday, 3 mcm higher for the weekend and 5 mcm higher for working days next week, Refinitiv data showed.

* In contrast, the forecast for Wednesday has been reduced by 6 mcm.

* "The increase in gas for power is driven by colder conditions forecast," the note said, adding that the balance was tighter for next week.

* Wind generation is seen at 9.9 gigawatts on Tuesday, which is forecast to drop to 4.8 GW on Wednesday, Elexon data showed, with the fall also potentially driving more gas-for-power demand.

* On the supply side, Norway's flows into Britain increased as the Langeled pipeline returned online from maintenance, pumping around 10 mcm on Tuesday.

* There is upstream maintenance starting in Norway, however, which reduced flows to the continent on Tuesday and is expected to keep Langeled flows to Britain at around 10 mcm on Wednesday and around 15 mcm/day until the start of October.

* An unplanned outage at one of Britain's largest gas fields, Culzean, continued on Tuesday, being extended to the morning of Sept. 25 from the morning of Sept. 24. The impact is reduced, however, to 65 GWh/day on Tuesday from 90 GWh/day on Monday.

* LNG send-out is forecast at around 23 mcm/day, which is expected to pick up in October, posing a bearish risk for gas prices.

* Britain's October contract was yet to trade.

* The day-ahead gas price at the Dutch TTF hub  fell by 0.05 euro to 10.00 euros per megawatt hour.

* The TTF October contract edged up 0.08 euro to 12.38 euros per MWh.

* The benchmark Dec-19 EU carbon contract fell 0.25 euro to 25.55 euros per tonne.

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