Demand stays low but gas prices still go up
Despite low demand fundamentals, gas prices moved up on Thursday as LNG supply woes and Norwegian maintenance came into focus.
Contracts across the curve appeared to move in tandem, with both the front-month and front-season contracts posting gains of circa 0.07p/kWh when compared to their previous close.
Constrained LNG supply served as a primary source of support, data from National Gas shows that send out volumes (within session) averaged at a rate of just 8mcm/d, which comes in stark contrast to the figure of circa 91mcm/d that was recorded for the same date last year.
News of an unplanned outage at the South Hook LNG terminal likely galvanised the upward sentiment, especially since the only cargo set to arrive at UK shores over the next 7 days, the ‘Gaslog Westminster’ was scheduled to arrive at this specific terminal early next week (data from GB REMIT and the Port of Milford Haven).
An upcoming surge in planned Norwegian maintenance may have served as secondary source of increases with data from offshore operator Gassco showing that offline capacity will surge to 176.91mcm/d by the morning of Tuesday
21st May.
Although this round of maintenance forms part of Norway’s essential summertime maintenance, any delays bringing assets back online would serve as unwelcome news for European Gas hubs especially after such issues
were encountered last year.
In other news, reports of another overnight Ukrainian drone strike targeting Russian oil infrastructure have surfaced. This time one of the country’s largest oil refineries based in the Russian State(Krai) of Krasnodar has been taken offline due to a fire at the facility, the news came after the similarly important Volgograd refinery was shut down in a similar fashion earlier this week.
Natural gas prices have so far continued their upward trajectory this morning with the June 24 front-month contract last trading 0.03p/kWh above its previous settlement, at time of writing.
The UK is currently consuming 29.63 GW’s of electricity (10:00 – 10:30).
The UK’s onshore and offshore wind turbines are currently generating only 1.98 GW’s (6.30%) of the UK’s total electricity with solar generation at 6.01 GW’s (19.14%) and gas for power generating a significant 11.80 GW’s (37.61%) of the total.
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