Energy Prices Fall on Lower Demand
NBP Natural Gas & GB Power Market Movement
Although demand was substantially higher with temperatures averaging 4 degrees Celsius, this was offset by higher gas exports from the continent, through the BBL gas line and the interconnector or IUK.
LNG send-out levels doubled during the week with an improvement in actual cargoes arrivals and expected arrivals in the month of November.
The UK also imported more gas from Norway which helped to limit the impact of higher demand. The oil price traded down by 1.82% ($0.83 per barrel) with news during the week of the possibility of the supply glut spilling into 2017 and higher production from non OPEC exporters. Doubts remains over the outcome of the next OPEC meeting, scheduled to take in Vienna at the end of the month.
Outlook for Week Ahead
Milder weather and a strong drop in household demand are expected, which should reduce the need for withdrawals from gas stocks. High wind power production should reduce gas demand from power producers. UK gas production is expected stable and strong Norwegian gas flows are expected to endure for now.
LNG send-out levels have improved with number of scheduled Qatari cargoes to the UK picking up. This elevation is due to developing LNG projects in Australia and the return of the Sabine pass terminal. Market movements in the wider fuel spectrum like Coal and Oil will impact UK gas prices. The IEA (International Energy Agency) has suggested that oil prices may continue to fall on supply growth unless OPEC makes significant supply cuts.
The latter, whilst it is felt unlikely at the next OPEC gathering cannot be ruled out or dismissed either. The oil price hit $53.14 in the second week of October, the highest 2016 price point to date. Any further price falls or rises in the wider fuel spectrum will feed through to UK energy prices.