UK stocks drop again on price incentive
UK stocks resumed a strong withdrawal mode over the past week after a steadier period the week before. The move came as the NBP Day-ahead contract reasserted its premium to the front-month contract, which gave traders the incentive to withdraw rather than to inject.
By Friday's open, UK transmission system operator National Grid showed total stocks were at 1.78 billion cubic metres, or 39.2% fullness. This was down by 6.8 percentage points from the previous week. In the week up to 20 January, stocks had shown an unseasonal build of 0.9 percentage points. This meant total stocks were almost 28% down from last year's level.
The main impetus for the withdrawals came from the long-range Rough site, which saw stocks fall by 2,638GWh (245 million cubic metres) over the week. This put stocks almost 40% down from last year's levels, although in early 2010 withdrawals were currently at a much stronger rate due to extremely high demand. Rough currently could flow at maximum send-out for a further 32 days.
Medium-range sites showed little change early in the week, but then the widening spread between Day-ahead and the front-month triggered withdrawals, with 355GWh coming out on Thursday alone. On Thursday, Day-ahead closed 2.85p/th above February '11. Medium-range sites have been quick to cycle storage this winter based on short-term arbitrage opportunities.
UK LNG stocks dived over the week, falling to 43.7% fullness by Friday's open, down from 72% the week before. EC
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