UK GAS-Prices slump to 9 month low on warmer weather forecasts

Fri Mar 28, 2014 5:04am EDT

Related Topics

* Gas system undersupplied by 17.4 mcm

* Demand 15.6 mcm below norm

LONDON, March 28 (Reuters) - British gas prices fell to a nine month low on Friday as warmer weather forecasts for the weekend offset an undersupplied system.

Gas prices for next-day delivery were trading at 52.25 pence a therm at 0838 GMT, down 1.65 pence on Thursday's close and at their lowest level since June 2013.

With supply flows seen at about 222 million cubic metres (mcm)/day and demand expected to be about 239.4 mcm the system was 17.4 mcm undersupplied, but traders said weather forecasts had dominated the direction of the market.

"People aren't looking so closely at the supply today, they are seeing higher weather forecasts and expecting lower demand in the coming days," a gas trader said.

Meteorologists at Thomson Reuters Point Carbon forecast temperatures in the UK could hit as high as 17 degrees over the weekend.

Britain's average yearly temperature in March is around 10 degrees.

Britain's gas demand on Friday was some 15.6 mcm below the seasonal norm of 255 mcm, data from National Grid showed.

A mild winter so far means there is sufficient supply in storage to cope with the undersupplied system while expected cargos of liquefied natural gas (LNG) are also weighing on sentiment, traders said.

The Rasheeda LNG tanker is expected to arrive at the UK's South Hook LNG terminal on Apr.3

Prices further out on the curve also fell, with the April contract down 0.70 pence to 53.00 pence a therm.

In the power sector, prices for baseload (24 hours) delivery on Monday fell 3.15 pounds to 41.70 pounds per megawatt-hour (MWh).

Britain's power market is currently well supplied. Just three nuclear plants with a combined capacity of 1680 MW were offline on Friday. (Reporting by Susanna Twidale; editing by William Hardy)

FILED UNDER: