July 27, 2012 / 10:23 AM / in 5 years

UK next-week gas slumps amid LNG influx

* Four Qatari gas tankers head for UK

* Asian price slump drives supply back to Europe

LONDON, July 27 (Reuters) - British gas prices for next week fell on Friday morning ahead of the arrival of four giant liquefied natural gas (LNG) tankers from Qatar boosting supplies.

Gas for next-week delivery fell 0.80 pence to 54 pence a therm amid an influx of LNG shipments that raised hopes of higher terminal send-out and the prospect of packed storage tanks.

“We could see a tank-top situation at LNG terminals once these deliveries come through,” a trader with a major UK utility said.

Month-ahead gas slid nearly half a penny to 53.55 pence as LNG shipments offset concerns over Norwegian maintenance scheduled for August, the trader said.

“We expect higher send-outs from South Hook (LNG terminal) next week as the cargo frequency probably is picking up,” analysts at Point Carbon said.

A nosedive in spot LNG prices in Asia over the last month signals the likely start of higher supply and lower prices for gas shipped to Europe, LNG traders and analysts told Reuters last week.

The price of liquefied natural gas (LNG) in Asia has fallen nearly 30 percent since June as collapsing demand from top importer Japan silences the world’s biggest spot market for the fuel.

Falling spot LNG prices in Asia to $13.50 a million British thermal units (mmBtu) this week has narrowed price differentials and slammed shut once lucrative arbitrage opportunities.

Seaborne deliveries to Europe slumped sharply for more than a year as tankers were diverted to Asia to take advantage of the biggest price differentials since 2009. That trend appears now to have abated at least temporarily, with rising numbers of tankers heading for Europe.

Drilling advances have led to a huge glut of shale gas in the United States leaving Europe as the best alternative to Asia for shipped LNG.

Gas for day-ahead delivery slipped almost a penny to 53.65 pence.

Imports from the Netherlands and from Norway via the Langeled pipeline together reached around 45 million cubic metres per day on Friday, more than a quarter of the day’s gas demand.

Consumption levels were expected to remain weak with mild weather forecasts reducing the need for heating and low demand for British gas from continental Europe.

Further out, benchmark front-season prices fell 0.20 pence to 62.55 pence.

In Britain’s wholesale power market, prompt prices were unchaged at 41.70 pounds per megawatt-hour (MWh).

Day-ahead baseload power fell 65 pence to 41.70 pounds per megawatt-hour (MWh). (Reporting by Oleg Vukmanovic, editing by William Hardy)

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