Small Business Market Update Tuesday 4 Dec 18
What has happened to Gas prices this week?
UK Gas prices have shown some periods of volatility this week, but remain flat week – on – week.
The UK has been above seasonal average temperatures for the previous week, ensuring that gas demand has been below the expected range. A weaker demand keeps gas prices down. The UK gas price came under further pressure on the supply side, as the UK remained over supplied for the majority of the week with significant LNG flows and high Norwegian imports.
The UK has seen extremely high LNG flows recently, with live flows consistently out turning above nominations. On Monday LNG, flows were expected at 74mcm but by 10am were flowing at 76.7mcm. A solid supply outlook remains in place for LNG arrivals into the UK.
There was some volatility on the front, as it was announced on Friday that the Troll Field and Kollsnes processing plant in Norway had to be unexpectedly taken offline for the weekend and Monday 3rd December taking ~5 – 11mcm offline.
One bullish fundamental on the front is the low wind generation that is being experienced in the UK. Because of this, there is a high demand load on Gas burn for electricity with expectations and forecasts predicting a calm December, meaning that this is likely to continue.
Oil prices affected the far curve with prices falling significantly, to lows of $58 per barrel. On Monday, huge gains were priced into the curve as news broke that over the weekend, Trump and China had agreed a 90-day cease in the ongoing trade war. This increased the global demand level as China; one of the world’s largest Oil consumers would have fewer restrictions. An OPEC meeting due on Thursday is lurking in the background with OPEC expected to announce further production cuts for 2019.
Small Business Market Update Tuesday 4 Dec 18 – Outlook
What specifically affected prices in the past week?
Bullish factors (upward pressure)
- Oil Prices Up
- Coal Prices strengthen
- Carbon Emissions Climb
- European Gas Maintenance
- Lower Wind Generation
- GBP Weakness
Bearish factors (downward pressure)
- Warm Weather
- Oil Prices Down
- Lower Gas Demand
Small Business Market Update Tuesday 4 Dec 18 brought to you by British Utilities