Forward energy prices continue to rise
NBP Natural Gas & GB Power Market Movement
Forward energy prices continued to rise on high consumption in the early part of the week and despite a large rise in temperatures from Wednesday. Gas demand from power generators was up a touch, Langeled gas flows to the UK were down around 9%.
LNG send-out remained >19% lower than the same time last year with a considerable reduction in cargo arrival to the UK for most of October. Domestic demand rose by 5 MCM and the outlook for a further 30 MCM increase on demand in week commencing 31st October and lower wind power added to the bullish sentiment. Oil closed the week lower at $49.71 therefore back to price points not seen since the beginning of October and substantially off the 2016 record high point of $53.14. All eyes on the OPEC meeting scheduled for the end of November.
Outlook for Week Ahead
Further price rises are expected in week 44. Domestic consumption is expected to rise by 30 MCM. Temperatures are expected to fall further as we head into the penultimate month and are likely to be below the seasonal norm on some days. UK gas production should be stable but uncertainty lingers around gas production at Dimlington. There should be a slight increase in LNG send-out.
It is possible that we will see a less constrained LNG market in November. Whilst an improvement in send-out levels is likely, expectations remain well below the 2015 and 2014 range.