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Prices rise on LNG drop, expectations of stronger demand

British wholesale gas prices increased, supported by a drop in liquefied natural gas (LNG) send-out and expectations of a demand rise.

* The day-ahead price was 0.90 pence higher at 29.75 pence per therm by 0938 GMT.

* The within-day contract rose by 0.55 pence to 29.55 p/therm.

* The gas system was 23.7 million cubic metres (mcm) undersupplied, with demand expected at 259.3 mcm and supply at 235.6 mcm, National Grid data showed.

* Undersupply was a result of lower send-out from UK LNG terminals and a drop in net storage withdrawals, Refinitiv analysts said in a morning note.

* LNG send-out fell to 37 mcm on Thursday from 57 mcm on Wednesday.

* There have been delays with arrivals of several LNG tankers due to strong wind this week.

* Storage net injections were expected at 10 mcm on Thursday, compared to 1 mcm of net withdrawals on Wednesday.

* Other supply sources were stable.

* Flows from Norway were around 84 mcm on Thursday, compared to 86 mcm on Wednesday, Gassco data showed.

* Flows from the UK Continental Shelf were 137 mcm on Thursday, 1 mcm lower than on the previous day.

* On the demand side, residential gas consumption is expected to increase on Friday and continue rising over the weekend due to expectations of colder weather, Refinitiv Eikon data shows.

* Gas-for-power demand is also predicted to increase to 54 mcm on Friday from 36 mcm on Thursday and rise further to 59 mcm over the weekend.

* Peak wind generation is forecast to drop to 10.6 Gigawatts (GW) on Friday from 13.5 GW on Thursday, Elexon data showed, with lower wind output usually leading to higher gas demand in power generation.

* A trader said, however, that weather fluctuations may not have as much impact on gas prices as usually in winter because of very full storages across Europe this year.

* “Even a beast from the East will not lead to extreme prices,” he said, referring to a cold spell two years ago that led to soaring gas prices across the continent.

* Curve contracts also rose but less significantly than the prompt, mostly supported by a rise in carbon emission and oil prices, the trader said.

* The February contract was 0.05 p higher at 29.45 p/therm, while the Summer 2020 product rose by 0.15 p to 28.35 p/therm.

* In the Dutch gas market, the day-ahead gas price at the TTF hub traded 0.09 euros higher at 11.27 euros per megawatt hour (MWh).

* The benchmark Dec-20 EU carbon contract was 0.35 euro higher at 24.86 euros a tonne.

* Oil prices rose on Thursday buoyed by the long-anticipated signing of an initial Sino-U.S. trade deal. (Reporting by Ekaterina Kravtsova; editing by Nina Chestney)

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

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