Forecasts of cooler weather beginning in the next few days provided support for some prompt/front curve contracts Tuesday morning on the UK NBP gas trading hub, but current weak demand and a surplus of gas in the system weighed on spot prices.
Within-day and day-ahead prices aligned at 54.50 pence/therm midday Tuesday, after the within-day contract fell slightly--by 0.10 p/th--from Monday's close and the day-ahead contract nudged up by 0.05 p/th.
Temperatures in the UK Tuesday remained above seasonal norms, keeping gas demand low, but by Friday are expected to fall and increased gas burn through the heightened need for domestic heating.
Forecast demand, at 286.3 million cubic meters was almost 15% lower than seasonal norms, National Grid data showed, as temperatures across the country exceeded long-term averages by 2-3 degrees Celsius, according to CustomWeather.
The system spent the morning long and at midday there was a surplus of about 10 million cu m.
"Flows from Langeled have ramped down to 64 million cu m from over 70 million cu m, but was offset by an increase in gas supply from Rough which ramped up to 18 million cu m," an analyst said. "In addition, flows from South Hook LNG terminal are strong this morning, providing 37 million cu m to the system."
Despite the withdrawals, storage levels were higher Tuesday after injections Monday, taking levels to 87.8% capacity.
"Storage facilities could be holding out for February where the temperatures are predicted to be below seasonal norms," the analyst said.
Gas for delivery in February gained 0.40 p/th in value from the previous session, trading midday at 55.40 p/th.
The front quarter contract followed suit, increasing by 0.30 p/th to 53.90 p/th.
Summer 12 contracts opened around 54.50 p/th but slipped to 54.00 p/th by midday, which was a 0.20 p/th growth from Monday's close.
"On Summer 12 gas, the market has not broken the gradual downward trend since the end of August, but it was broken the steeper downward movement we have seen through December, with prices back above 54.00 p/th, after reach a low of 52.00 p/th," the analyst said.
Winter 12 was changing hands at 67.25 p/th, up by 0.05 p/th and Summer 13 gained 0.10 p/th at 60.10 p/th.
