UK GAS-Prompt prices fall, within-day drops to 2009 low

The within-day contract fell by 2.10 pence to 18.40 pence per therm by 1046 GMT, its lowest level since Oct. 2009.
31 Mar, 2020
  • The within-day contract fell by 2.10 pence to 18.40 pence per therm by 1046 GMT, its lowest level since Oct. 2009.
  • Gas storage is around 20pc higher than last year, LNG imports continue for now but north-west Europe might not be able to keep absorbing excess supply, he said.

The within-day contract fell by 2.10 pence to 18.40 pence per therm by 1046 GMT, its lowest level since Oct. 2009.

The day-ahead contract was 0.35 lower at 18.45 p/therm.

Traders said an increase in supply from the country's liquefied natural gas (LNG) terminals helped to push prompt prices lower in an already weak market.

European power and gas prices have sunk to new lows as the coronavirus outbreak has triggered a sudden and unprecedented slump in energy demand in Europe.

Lockdowns and stoppages in power-intensive manufacturing have coincided with a seasonal fall in usage in residential heat markets for gas because of milder spring weather.

"We expect demand to be severely impacted by COVID-19 in Q2. A relaxation of lockdown measures should see a modicum of demand recovery in Q3.

However, with the everchanging landscape risk across all forecasts are elevated," said Wayne Bryan, director of European gas research at Refinitiv.

Gas storage is around 20pc higher than last year, LNG imports continue for now but north-west Europe might not be able to keep absorbing excess supply, he said.

"Stronger renewables, some maintenance being shifted into Q1 2021 or cancelled and upwards revision to temperatures are only exacerbating the downside potential.

However, this is limited and once we see a supply-side reaction we will have a clearer idea of supplier pain points," he added.

On the supply side on Tuesday, flows from Britain's LNG terminals were at 78 million cubic metres (mcm) on Tuesday, up 18 mcm from the previous day.

Britain's gas system was oversupplied by 14 million cubic metres (mcm) with demand forecast at 269 mcm and flows at 283 mcm/day, National Grid data showed.

Traders said gas prices on the curve were buoyed by a slight recovery in other energy markets as oil prices edged higher.

"Gas (is) getting dragged up by the rest of the (energy) complex," a trader said.

Oil gained on Tuesday after US President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilise markets, lifting benchmark contracts off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

The April contract was up 0.55 p at 17.40 p/therm.

The May contract was up 0.80 p at 17.10 p/therm.

The day-ahead gas price at the Dutch TTF hub inched down by 0.01 euro to 7.14 euros per megawatt hour, after slumping to a 2006 low on Monday.

The benchmark Dec-20 EU carbon contract was up 0.86 euro at 17.92 euros per tonne.

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