UK Business Gas Outlook:

Catalyst Commercial Services Ltd — Fri, 16 May 2008 18:34:15 +0000

UK gas prices at the National Balancing Point were a touch firmer Thursday as colder weather approached, traders said. Within-day was up 0.6 p to 57.35 p/therm by noon London time (11:00 GMT), while day-ahead was up half a penny to 58.6 p/th. The fundamental picture was fairly steady, repeating the patterns of the first half of the week. National Grid data showed demand at 228.6 million cubic meters/day at 11:00, 56.4 million cu m/d below seasonal norms. The system was 13 million cu m long at that time. The Continent continued to import very little gas through the UK-Belgium Interconnector, traders said, while domestic retail demand also stayed fairly low, despite a drop in temperature. One trader said it looked like temperatures were not yet low enough to raise demand. But colder weather still was expected for the weekend and into the following week. That kept a premium on the weekend and working days next week contracts, both of which were up about half a penny by midday, to 59.25 p/th and 60.25 p/th respectively. “Earlier on people thought next week might end up with even higher demand,” one trader said, adding that movement on those contracts seemed to have died down by noon, however. Supplies were again fairly steady, with flows through the Netherlands-UK BBL pipeline up to about 18 million cu m/d again after dropping back by some 8 million cu m/d late Wednesday. However, flows into St Fergus Total, fed by the Norway-UK Vesterled pipeline, dropped back by 8 million cu m/d, leaving the overall picture fairly static. Near curve contracts traded up in line with the prompt, with June up 0.1p to 60.6 p/th by 12:00 and July up 0.4 p to 64 p/th. On the far curve, seasonal contracts were fairly buoyant, reflecting some recovery in crude oil prices after Wednesday’s $2 drop. But gas volumes traded were fairly low, one trader said, adding that the market seemed to be long already with few players willing to sell.Winter 08 was half a penny to 86 p/th by noon, and had traded up to 86.25 p/th earlier in the session, while summer 09 was up a penny to 74 p/th. The back end was also fairly bullish, with winter 10 up a penny to 83.2 p/th and summer 10 up the same amount to 72.25 p/th. “The back end’s performing well at the moment, it looks fairly cheap when you look at the oil formulas,” one trader said. He added that financial players seemed to be the main buyers of those contracts.

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The UK's Largest Energy Blog - Catalyst-Commercial.co.uk » UK Business Gas Outlook:

UK Business Gas Outlook:

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