Tuesday 26 July 2016
UK left with tight gas system – Y Report
Changes in Norwegian scheduling mean the UK is left with a slightly tight gas system this week.
It isn't forecast to return until around the 8th of August, according to Inenco's Y Report.
It states revisions to LNG schedules meant the expected daily send-out of 35mcm in August is now likely to be closer to 27mcm per day.
Gas is currently making up around 50% of the energy mix.
Gas contracts have traded to an eight-month high this week due to increased use in power demand.
Following the announcement last week the Rough storage facility has gone offline until March 2017, prices have not fallen as expected.
[youtube url="https://www.youtube.com/watch?v=iWFrwuIVpOo" width="560" height="315"]
Dorian Lucas, Energy Analyst and Inenco, said: "Looking at the power market, it's been relatively range-bound over the recent weeks, we've not really seen any significant moves since June. In terms of seasonal prices we've seen prices consolidate following volatility following the Rough announcement.
"At the moment there is no clear indication especially over the short term where prices are going to go. If we look back to January, we have seen prices progressively pick upwards and we are still in uptrend however the recent pause we have seen in price action may mean this is weakening and we are about to see potentially a little bit of downside."
Recent advice has been to increase hedges but now it is to hold. The uptrend is paused, with oil prices falling from $50/bbl (£38.1/bbl) to $45/bbl (£34.3/bbl), so gas and power prices could soften in the short term, he adds.
