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France: Buoyant crude oil outweighs bearish natural gas fundamentals

13 Mar 2012 18:29:22 | esgm

Prices were bullish across all PEG contracts on Tuesday, with the high Brent crude oil price influencing the curve, and also providing impetus for the Day-ahead contracts. LNG concerns and low gas storage levels were also attributed as bullish factors.

The fears of reduced LNG supplies continued, as terminal data only showed the Gimi arriving into the Fos terminal on 16 March and LNG Borno arriving into the Montoir port on 17 March.

Gas storage levels have crept even lower recently, down to 22.3% full on the PEGs from 25.97% full across the PEG balancing zone last week, according to GSE data.

Maintenance is planned at several storage sites, including Serene Nord, Saline, Serene Sud and Sediane Littoral, limiting withdrawals in April and worsening matters further.

The PEG Sud Day-ahead contract's spread to the PEG Nord increased to €1.00/MWh, as GRTGaz data highlighted 220GWh reduced capacity from a maximum technical capacity of 449GWh, in the direction of Nord to Sud.

Bearish fundamentals existed on the PEGs, but they were outweighed by the bulls. Temperatures remained above average in some areas of France, in some places by as much as 6°C, according to WSI data.

The same data suggests temperatures are generally expected to stay this way over much of Europe for the next 10 days.

GRTGaz demand data showed a reduction in forecast day-ahead gas demand on both the PEG Nord and PEG Sud balancing zones, falling by 27% and 33% respectively over the last week to 86Mm³ and 38Mm³.

The Summer '12 contract found support from a firm crude oil market. Geopolitical tensions resulted in risk premiums being added to those contracts influenced by the oil market in the event of a spike. TW/JT

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