UK natural gas for delivery Monday edged higher Friday on the back of colder weather forecast for next week, although the system remains well supplied and the far curve continues to be supported by strong sentiment in crude oil, traders said.
The day-ahead contract was up half a penny on Thursday's finish to trade at 54.60 pence a therm by midday London time, while that for immediate delivery rose 0.30 p/th to 54.50 p/th.
"Colder weather is expected next week, which has supported day-ahead. Flows from Bacton Shell are stable this morning after yesterday's technical problem. LNG flows from Isle of Grain are subdued, however Teesside LNG flows are strong as the Exemplar cargo ship berthed yesterday. As such, the system is finely balanced," a trader said.
Temperatures in London are currently mild at 4 degrees Celsius above normal for this time of year, but levels will gradually decline from Saturday to a low of 4 degrees Celsius below the seasonal average of 3-9 degrees Celsius by Tuesday, 8 degrees Celsius below current levels, the latest CustomWeather data showed.
National Grid data showed demand remained well below the seasonal average at 285 million cubic meters a day -- 19% or 66 million cu m/d below normal -- and the system remained well supplied after opening finely balanced, 4 million cu m/d long by lunchtime with supply at 289 million cu m/d.
Bacton Shell flows were back up to just under 15 million cu m/d Friday and elsewhere all domestic pipeline flows remained unchanged on the day, with nominated flows through the UK-Belgium Interconnector forecast at 6 million cu m/d into Belgium in the morning after flowing at 11 million cu m/d Thursday afternoon.
LNG was contributing around 60 million cu m/d into the system, with South Hook flowing at 40 million cu m/d, with the Isle of Grain and Dragon LNG terminals at 10 million cu m/d each, with further fresh LNG deliveries expected in the next week, mainly from Qatar.
Local port data showed deliveries would berth at South Hook from Qatar, which include the Al Safliya on Sunday, the Excelerate on March 1 and the Al Sadd on March 4, with the Bluesky carrier also expected at Dragon LNG terminal that same day.
On the curve, the front-month was down just 0.05 p/th on the day at 54.35 p/th by midday London time, while the front-quarter had attracted no trading interest by that time in a much less liquid start to a session compared to the rest of the week dominated by news from Libya.
"The far curve continues to be supported by firm crude prices, with Winter 2012 onwards opening up from last night?s close. The front two seasons have opened softer, weighed down by a weaker prompt," a trader said.
Gas for delivery this summer was 0.30 p/th lower at 54.25 p/th and the Winter 2011 contract hovered near its recent 16-month high, changing hands a quarter of a penny lower on the day at 63.15 p/th.
Despite sources citing stronger sentiment on the far end of the curve, by lunchtime there was only an offer for Winter 2012 at 65.50 p/th and Winter 2012 was offered at 67.50 p/th with no firm deals done.
