UK natural gas jumped to the highest in almost two months as demand for the fuel in power generation is set to strengthen amid declining supply from wind, coal and nuclear plants.
Gas for the next working day climbed as much as 3.5% to the highest since June 16. Winds that will exceed 20 miles per hour (32 kilometers per hour) on Aug. 17 and produce more than four gigawatts throughout the day will subside during much of next week, Bradley Harvey, a forecaster at MDA Weather Services in Gaithersburg, Maryland, said Aug. 13.
Electricite de France SA halted four UK nuclear reactors for maintenance lasting about eight weeks, the company said Aug. 11. The units have the capacity to produce about 2.4 gigawatts of electricity. Two in three of the U.K.’s coal-fired power plants weren’t generating as of 7.30am London time, according to data from National Grid Plc, the network operator.
“Tight intraday supplies have pushed prompt contracts further up,” wholesaler Wingas UK Ltd. said today in an e- mailed report. Gas demand for electricity remains high, with “ongoing outages at coal and nuclear sites increasing the requirement for gas generation.”
Day-ahead gas in the UK, Europe’s biggest market, rose to 42.75 pence a therm ($7.14 a million British thermal units) on the National Balancing Point before trading at 42.4 pence a therm at 11.22am in London, broker data showed. The contract gained a fifth day, the longest winning streak since November. Within-day fuel jumped as much as 3.4% to 42.6 pence a therm, also the highest since June 16.
UK gas demand including exports and power generation will rise to 160 million cubic meters a day on Aug. 18-19 from 154 million today, National Grid estimates. Industrial, commercial and residential demand is forecast to increase to 66.1 million cubic meters a day next week from 61.6 million cubic meters today as temperatures are 2C (3.6F) below the seasonal norm, according to the Bloomberg gas model and data from WSI Corp.
Temperatures in the UK, Germany and France are forecast to be as much as 4 degrees below normal through Aug. 24, Reading, England-based forecaster Metraweather said today in an e-mailed report.
Flows into the UK were 145 million cubic meters, 9% below the 10-day average, with Shell’s St. Fergus gas plant in Scotland starting maintenance today, grid data showed. Shipments from Norway, Britain’s biggest supplier, were 37% below the 10-day average, according to Gassco AS data. Norway’s Kollsness gas processing plant is halted for maintenance until Aug. 21 and Norwegian supplies via the Flags pipeline to the Shell Esso Gas and Liquids terminal in St. Fergus will be reduced by 18 million cubic meters a day for works from today to Aug. 25.
“Current day wind generation levels dropped as gas-fired continues to handle half of the UK’s power generation,” Gazprom Energy said in a report on its website today. Summer maintenance is reducing supply from Norway and the UK Continental Shelf, it said.
UK gas for next-month delivery climbed as much as 2.2% to 44 pence a therm, the highest since June 16, on the ICE Futures Europe exchange. Prices are heading for a second week of gains as tensions in Ukraine escalate. Fuel for winter delivery gained 0.5% to 62.1 pence a therm on ICE.
Ukraine passed a bill yesterday allowing the country to impose sanctions on Russia, potentially disrupting flows to Europe. Russia meets about 30% of Europe’s gas needs, half of which travel through pipelines crossing Ukraine. Finnish President Sauli Niinistoe will meet with Russia’s Vladimir Putin today in an effort to defuse tensions he said risk dragging the world into a new cold war.
Dutch gas for September delivery on the Title Transfer Facility hub rose 0.9% to 18.52 euros ($24.79) a megawatt-hour, while the equivalent contract on NetConnect Germany advanced 1.1% to 18.65 euros a megawatt-hour, according to broker data.
Front-month gas prices in the UK and the Netherlands will probably rise next week, according to a Bloomberg survey of traders, brokers and analysts. This was the first time traders were bullish since the survey started five weeks ago.
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