UK GAS-British prices fall on Ukraine-Russia deal
* Nov, Dec UK gas contracts touch record lows
* Ukraine, Russia, EU sign gas deal
* Warmest Halloween on record, Met Office says
(Updates throughout)
By Nina Chestney
LONDON, Oct 31 (Reuters) – British wholesale gas prices for
the rest of this year fell on Friday after Ukraine and Russia
signed a deal that will see Moscow resume gas supplies to Kyiv
this winter, while warm UK weather and high storage levels added
to the bearish tone.
Russia is Europe’s biggest supplier of gas and provides
around a third of the continent’s needs, pumping roughly half of
that via Ukraine. Some of this reaches Britain from continental
European storage sites.
Failure to reach an agreement would have raised fears of
disruptions to European gas supply via Ukraine this winter, but
prices of wholesale natural gas had already been declining on
Thursday afternoon in anticipation of a deal.
The UK gas contract for delivery in November was trading at
52.20 pence per therm at 0915 GMT on Friday, down 1.5 percent
from the previous settlement. It earlier touched 52.00 pence,
its lowest since the contract began trading.
The December contract was at 54.60 pence per therm, down 1.7
percent, having touched its lowest ever level of 54.40 pence in
earlier trade.
However, traders said the falls were not that substantial.
“Everyone was expecting this (deal) to happen so it’s not
going to have a massive impact on prices, although the near
months have come off a bit,” one gas trader said.
“There are no real bullish indicators out there. The
long-term forecast for November and December is warm; storage is
very high right across the continent,” he added.
TTF gas prices in the Netherlands, which has become Europe’s
leading natural gas hub, declined slightly.
The TTF price for December was down almost 1
percent at 23.15 euros per megawatt-hour, while the
first-quarter price was down 1.35 percent at 23.35
euros per megawatt-hour.
PROMPT PRICES
Near-term UK gas prices posted bigger losses but this was
due to demand-sapping almost-summer temperatures forecast for
some parts of Britain on Friday and Saturday.
The gas price for immediate delivery slumped 5.7 percent to
48.75 pence per therm, while gas for delivery at the weekend
fell slightly more than 5 percent to 45.00 pence per therm.
Britain’s Met Office tweeted that Friday could be the
warmest Halloween on record with temperatures of 21 degrees
Celsius in the southeast.
Due to low demand, the British gas system was oversupplied
by 14 million cubic metres (mcm) on Friday, National Grid data
showed.
Britain’s gas storage sites are 98 percent full, according
to Gas Infrastructure Europe.
“There is so much gas we are going to have problems
containing it all this weekend, and with storage injection
partially disabled, we should see a lot of exports to Europe,” a
gas trader said.
SSE’s Aldbrough gas storage site has its injection
capability reduced until the end of November due to an outage.
(Additional reporting by Oleg Vukmanovic in Milan; Editing by
Dale Hudson)