BRITAIN OUTLOOK: Gas prompt to extend losses amid LNG influx

Source: Heren

2019/03/15

Prompt prices at the NBP natural gas hub are expected to extend losses in week 12, as overall fundamentals remain bearish and supply is primed to meet any uptick in consumption.

The contract for delivery of gas in weekdays next week was trading at 38.25p/th on Friday afternoon, which was below the Day-ahead average price in the second half of week 11. This came despite demand for natural gas is set to rise at the beginning of week 12. TSO National Grid forecast Monday’s demand would increase to 288 million cubic metres (mcm) – an increase of 6% over Monday-Thursday’s average in week 11 – before falling back to 255mcm on Tuesday.

The weather will turn milder mid-week, with temperatures averaging from 0.5-1.5°C above seasonal average, MetDesk forecast. Further out, temperatures for week 13 are forecast to be 1-3°C above average.

Conditions in Britain are set to turn more settled after a windy week 11, meaning offtake from power stations for gas-fired generation may increase. On Monday, wind farms are only forecast to produce 2.6GW of power, and an average of 5GW during the week. Tuesday is forecast to be an outlier, when wind farms may generate up to 9.4GW.

LNG sendout to the grid, which supplied about a quarter of demand in week 11, is likely to remain high as British terminals were anticipating the arrival of eight deliveries by the end of March.

While only one tanker was set to arrive by Friday in week 11 – when the 210,000cbm Al Karaana was due to dock at South Hook – a further three were set to arrive over the weekend, and four more were expected by the end of the month. These include the 160,300cbm Malanje, expected to arrive at Isle of Grain on 26 March. This ship is carrying the first Angolan LNG cargo set to be delivered to Britain.