Monday 20 October 2014

Italy’s high price attracts UK gas – DMR

Higher gas prices in Italy are drawing gas produced in the UK, reported the daily market report from npower.

This is evident from gas flows to the continent via the IUK gas pipeline, which connects Bacton on the rump of England with Zeebrugge on the coast of Belgium, according to the market update.

Gemma Perks, Client Portfolio Manager at npower’s Optimisation Desk said today: “IUK pipeline continues to export to the continent despite the NBP (National Balancing Point) trading a premium.”

She explained: “This is ultimately as flows are being redirected to Italy which is trading at a significant premium to the rest of north-west Europe.”

Prices on the UK power and gas markets “lost ground” over the weekend, said Ms Perks, “opening at a discount this morning as weak demand and reduced supply disruption fears sees the gas system open in length.”

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The gas system was forecast to close with 28 million cubic meters (mcm) more than it needs today as consumption remains “relatively low”.

As for the power system, margins between electricity supply and demand remain “healthy” aided by a decent amount of wind power, suggested the analyst.

She also noted the overnight news of a fire at the Didcot power station has halved its power output to 700MW, “with no early news as to when the affected units may be back”.