UK gas prices at the National Balancing Point fell again Friday after a brief recovery over the past two days, on the back of a long system, traders said Friday. After finishing Thursday’s trading session on a short system, Friday trading started on good supplies. At 11:00 GMT, National Grid data showed excess gas of 21.2 million cubic meters. This was met by a decline in demand of 10.8 million cu m to 380.4 million cu m/d. The bearish system pulled prompt prices down. Another factor linked to the weakening of the prompt were Friday’s losses on the crude oil market. “It seems like the curve is driving the prompt at the moment and not the other way round,” one trader said at 1200 GMT. At noon GMT, within-day traded 2.75 p lower from Thursday’s close at 61.25 p/therm. Day-ahead behaved similarly, losing a penny to trade at 62.25 p/th. Amid continuing colder weather, weekend contracts traded flat at 61.50 p/th.

Flows into the UK were largely stable. Norwegian supplies through the Langeled pipeline were flowing at their maximum strength all morning at about 70 million cu m. Facilities at Hornsea had decreased withdrawals somewhat to 10 million cu m. Withdrawals from Partington facilities were stopped. Early Thursday afternoon the onshore LNG storage site at Partington in northwest England had been turned on to withdraw gas at up to 20 million cu m.

National Grid said Thursday it will be emptying two of the four storage tanks at the end of this storage year, April 30, 2009. The company said it is not planning to refill the two emptied tanks afterward, as the liquefaction plant at the facility is now “reaching the end
of its life.” Rather it will focus on providing a more reliable service from the two remaining tanks. So drawing on Partington could have been partly due to the end of winter plans to shut down, as well as the high demand Thursday. The near curve followed fundamentals on the prompt. January traded down 1.60 p to 61.75 p/th and February traded 1.35 p lower to 62.75 p/th. Further out on the curve the picture was similar. After two relatively stronger days, crude oil weakened again. At 1200 GMT, front month Brent ICE futures traded $2.55 lower from Thursday’s close at $44.84/barrel. Nonetheless, losses on the curve were less dramatic than on the prompt.

According to one curve trader, weaker crude oil was not the only aspect that drove UK gas prices Friday morning. “Oil is helping prices to come down, but there is also people having to get out of their short positions,” he said. This may explain the relative stability of the curve. Summer 2009 was left to trade at 52.25 p/th, down 0.85 p from Thursday’s close. Winter 2009 was also down by 0.85 p to trade at 66.5 p/th. Summer 2010 traded at 56.75 p/th.

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