London: There’s beautiful weather across most of Europe, which won’t please natural gas sellers.
Same-day gas in the UK, a European benchmark market, has fallen for eight sessions, its longest declining streak in almost a decade. Mean temperatures in northwest Europe are set to be more than 20 degrees Celsius this weekend, 5 degrees above the 10-year average.
Blame the sunshine. A string of warm, sunny days has pushed British demand for gas below the five-year average for most of the past two weeks. It’s also increased available solar power, reducing the need for gas in power generation.
“It’s all fundamentals,” said Jade Kalinowsky, a senior trader at Fredericia, Denmark-based utility Dong Energy A/S. “Normal demand today should be 212 million cubic metres and it is forecast to be 168 million cubic metres.”
Same-day gas in the UK fell 2.2 per cent to 35.9 pence a therm ($4.62, Dh16.97, per million British thermal units) at 11.10am London time, extending its drop this month to 13 per cent, compared with no change in the same period last year, according to broker data compiled by Bloomberg since 2007. Longer-term contracts rose with commodities benchmark Brent crude.
Adding to the short-term contract plunge is the lack of the Rough gas storage facility, which is offline for repairs until at least next year and so unable to soak up surplus supply. Market participants inject fuel into the site for use in winter during warmer months, including May.
Most traders are bearish front-month gas as additional liquefied natural gas sails to the region. Seven LNG cargoes are currently scheduled to arrive in northwest Europe through the first 10 days of June.
