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UK gas prices fall as gales boost wind output

Gas

28 Nov 2018 10:59

London

28 Nov 2018 10:59

(Montel) UK gas prices dropped in early Wednesday trading as strong wind power generation levels outstripped gas’s share of the UK power mix and forecasters predicted milder weather.

The NBP within-day contract traded last down 2.45p at 63.75p/th, while the day ahead was 1.85p lower, at 63.65p/th, on one broker.

The December contract traded down 2.49p on Ice to 65.65p/th.

Wind accounted for a 30% slice of UK power generation at the time of writing, while gas had just a 28% share, TSO data showed.

The UK Met Office said it would be “very windy everywhere” in the current session, with gales and severe gales affecting northern and western parts of the country.

“This will certainly have a big effect [as] demand for gas is now almost 24mcm below seasonal norms,” said a UK-based gas trader.

London-based gas analyst Alexandros Tzianoumis, also pointed to the bearish influence of “strong wind and higher temperatures”.

“An upward revision in short-term weather forecasts is one of the main bearish drivers today,” he said.

Forecaster SMHI said temperatures across western Europe from early next week would be “very mild”, at an average of 3-5C above normal for the time of year.

Long system
On the supply side, the UK gas system over the coming 24 hours was seen to be 7mcm long, with demand pegged at 239mcm, according to TSO National Grid data.

This was despite Norwegian flows via the Langeled pipeline falling to below 60mcm, from more than 70mcm on Tuesday.

However, combined LNG flows from the South Hook and Dragon terminals were seen at nearly 30mcm/day, with three further vessels scheduled to arrive by mid-next week, according to the Milford Haven Port Authority.

On the continent, the Dutch TTF day-ahead contract was down EUR 0.68 at EUR 24.43/MWh, while the December contract was EUR 0.69 lower, on Ice Endex, at EUR 24.47/MWh.

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