British wholesale gas contracts rose on May 22, ahead of a planned shutdown of an important Norwegian supply route this week and potentially higher exports to Europe until mid-June.
Gas for immediate delivery rose by 0.75 pence (US$0.01) to 58.00 pence (US$0.78) per therm at 3:45 a.m. CT, even though the system was oversupplied.
Gas for May 23 rose by 1.90 pence (US$0.03) to 58.90 p/therm (US$0.79).
June gas was 1.45 pence (US$0.02) higher at 57.95 p/therm (US$0.78).
Analysts attributed higher gas prices to the planned shutdown of Norway’s Langeled pipeline to Britain from May 17 which will see less gas arriving in Britain.
The long-planned closure of the InterconnectorUK (IUK) pipeline between Britain and Belgium from mid-June could also be incentivising European consumers to boost imports and replenish reserves, analysts at Thomson Reuters said.
“Gas import demand from the Netherlands is likely to drive U.K. prompt gas prices up in the first half of June and encourage heavy mid-range storage withdrawals,” Katarzyna Piaskowska, Thomson Reuters gas analyst, said.
A senior analyst at a major European utility believed the Norwegian pipeline outage was the main factor driving gas prices higher.
“It seems like the IUK maintenance next month is a source of concern but the shutdown was planned a long time ago so I'm not convinced,” he added, saying that rising crude oil prices are also setting the tone for forward gas contracts.
Brent crude oil is again edging toward $80 a barrel on concerns Venezuela’s oil output could drop further and potential U.S. sanctions on the OPEC member.
Britain’s gas system was oversupplied by 5.1 million cubic meters per day with demand estimated at 178.3 million cubic meters per day and supply at 183.4 million cubic meters per day, National Grid data showed.
Average temperatures this week are on a rising trend and set to top 17 degrees Celsius by the weekend, Thomson Reuters Eikon data shows.
Therefore, heating demand is forecast 3 million cubic meters lower compared over the weekend.
Exports through the IUK pipeline to continental Europe are 2 million cubic meters higher than May 21 at 36 million cubic meters.
Sparse LNG deliveries into Britain are also adding support to prices. Rising Asian spot LNG prices this month will only make it more difficult for Britain to attract supply, a factor that could support front-month prices.
Day-ahead gas at the Dutch TTF hub rose by €0.47 (US$0.55) to €22.70 (US$26.75) per megawatt hour.
The benchmark Dec. 18 EU carbon contract was €0.30 (US$0.35) higher at €15.87 (US$18.70) a tonne, still at a seven-year high.
Recommended Reading
Sinopec Brings West Sichuan Gas Field Onstream
2024-03-14 - The 100 Bcm sour gas onshore field, West Sichuan Gas Field, is expected to produce 2 Bcm per year.
Tech Trends: SLB's Autonomous Tech Used for Drilling Operations
2024-02-06 - SLB says autonomous drilling operations increased ROP at a deepwater field offshore Brazil by 60% over the course of a five-well program.
The Need for Speed in Oil, Gas Operations
2024-03-22 - NobleAI uses “science-based AI” to improve operator decision making and speed up oil and gas developments.
TotalEnergies Starts Production at Akpo West Offshore Nigeria
2024-02-07 - Subsea tieback expected to add 14,000 bbl/d of condensate by mid-year, and up to 4 MMcm/d of gas by 2028.
Well Logging Could Get a Makeover
2024-02-27 - Aramco’s KASHF robot, expected to deploy in 2025, will be able to operate in both vertical and horizontal segments of wellbores.