France: Bears in charge as natural gas market corrects Friday's gains
French natural gas prices fell on Tuesday as a combination of bearish factors impacted the market both on the prompt and on the curve.
Tuesday's session was "very quiet," a trader said, as many trading desks were closed because of a public holiday in France.
The arrival of higher-than-average temperatures caused a fall in demand, and was indicated as the main cause of the drop of the French prompt contracts.
The Day-ahead product at PEG Nord shed €0.90/MWh session on session. The significant drop was also due to a market correction following Friday's bullish session, when the French market - mostly because of scarce liquidity - posted significant gains in spite of the rather bearish trend registered on the other major European hubs.
Demand forecasts coming from France's main transmission system operator, GRTgaz, showed an expected slight decrease in demand of about 1.8Mm³ in the northern balancing area on Wednesday and a more significant one of about 4.5Mm³ in the southern balancing zone, which is operated by GRTgaz.
This did not correspond to the change in the spread between PEG Nord and PEG Sud spot prices, with the PEG Sud Day-ahead contract losing €0.55/MWh session on session and therefore widening its premium to its northern counterpart to €3.35/MWh, a €0.35/MWh increase when compared to its Friday's premium.
At the north-south link, reduced transport capacity amounted to 392GWh on Tuesday out of a maximal technical capacity of 448.8GWh, GRTgaz data showed.
On Monday, because of an extreme lack of liquidity, the allocations for gas to be transported from PEG Nord to PEG Sud fell to 22.3GWh while on Friday they totalled 325.1GWh. DB
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