Sharp increase in LNG supply offsets higher demand for gas
A sharp increase in LNG supply helped to offset unseasonably high demand for gas on Monday as the cold weather front moves in.
Contracts across the curve continued their downwards trajectory, extending the previous sessions comparatively small losses.
The biggest moves were posted on the near-curve, with the December 23 front-month contract retreating 0.24p/kWh below its previous close. According to data from National Gas, LNG send out from the Milford Haven and Isle of Grain terminals averaged around 80mcm/d across the day, a staggering increase of 144% when compared to the previous session and enough to meet almost 30% of total forecasted demand.
On the other hand, near-freezing temperatures and a subsequent surge in demand undoubtedly prevented further downside.
Our latest demand forecast model shows that British demand will remain above seasonal norms for at least the next 2 weeks, as plummeting temperatures continue to bolster heating-related demand.
In other news, reports have emerged this morning that an LNG tanker has become stuck at the Australia Pacific LNG facility in Queensland. The ‘Cesi Wenzhou’ had been scheduled to sail to China but lost power whilst moored at the terminal, this particular terminal is only able to accommodate one vessel at a time, so several shipments have been delayed- potentially tightening the global LNG supply picture in the short term.
Gas prices continue to decline this morning, with the front-month and season contracts currently being offered circa 0.14p/kWh below their previous settlement at time of writing.
As it gets colder we are starting to consume more gas and electricity. If we check the latest half hourly period at the time of writing (09:30 – 10.00), electricity demand in the UK has increased to 39.47 GW’s. 54.20% (22.57 GW’s) is being generated from gas at the moment with wind turbines only contributing 3.25 GW’s (7.80%) of the total generation mix.
A full insight into the electricity generation mix is available from Drax by clicking here.
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