UK gas prices fall, Yemen LNG explosion supports May

Mon Apr 2, 2012 7:43am EDT

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LONDON, April 2 (Reuters) - British front-month gas prices found support on Monday from news Yemen's liquefied natural gas (LNG) exports would be cut by four cargoes following a pipeline explosion, while other contracts eased in line with weak equities markets, traders said.

British gas for delivery in May traded above historical closing levels on Monday at 60.30 pence per therm as British LNG imports could suffer from other buyers offering a premium over UK prices to attract lost exports from Yemen.

"The news should provide some good support," said a UK gas trader at a utility. "But equity weakness is also feeding into the oil and gas complex."

Yemen LNG said late on Friday its production would drop by four cargoes following the explosion of a pipeline which feeds the terminal with gas.

"Production has stopped but the loss of production is expected to be limited to four cargoes as the LNG plant was due to shut down on April 15 for annual maintenance," the company, owned by France's Total, said.

Yemeni LNG represented around 2 percent of UK LNG imports last year and the last cargo arrived in July, latest government data showed.

But other buyers of Yemen LNG such as Japan, Korea or China, may seek to fill the shortfall with other spot supply, which Britain also competes for.

Other UK gas contracts traded lower on Monday, reflecting the well supplied system and weak demand picture.

Day-ahead gas fell 1.45 pence to 60.35 pence per therm as gas demand slipped 21 percent below seasonal norms thanks to mild weather.

The system was around 8 million cubic metres per day (mcm/d)oversupplied on Monday, despite ongoing supply losses from Total's Elgin platform.

Benchmark front-season gas, which has rolled to the winter 2012/13 contract, traded 0.30 pence lower at 74.80 pence.

Power prices rose one pound to 47.75 pounds per megawatt-hour. (Reporting by Karolin Schaps; editing by James Jukwey)

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