UK gas prices dip on low consumption, traders eye Ukraine outcome
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LONDON: Prompt natural gas prices in Britain dipped on Thursday morning on lower consumption forecasts and as flows returned after outages, while prices further out were down ahead of the outcome of Ukraine gas talks.
Prices for delivery on Friday were 1.25 pence lower at 51.35 pence per therm at 0841 GMT, while prices for immediate delivery were down 1.40 pence at 52.10 pence.
Traders said they were expecting lower consumption of gas on Friday and over the weekend due to warmer-than-average temperatures.
Flows from the UK’s Continental Shelf have also increased after an outage at Perenco’s Easington terminal ended on Wednesday and an outage at Gassco’s entry point SEGAL returned to service on Thursday.
However, National Grid data showed Britain’s gas system to be undersupplied by around 5 million cubic metres, possibly due to increased exports to the continent.
Further along the curve, prices edged down as traders waited for the outcome of Ukraine gas talks in Brussels.
Prices for Q1 2015 were down 0.21 pence to 57.75 pence per therm and Summer 2015 prices were 0.35 pence lower at 52.65 pence.
GAS TALKS DEADLOCKED
Ukraine’s efforts to unblock deliveries of Russian gas as winter sets in remain deadlocked as Moscow’s negotiators were quoted demanding firmer commitments from the European Union to cover Kyiv’s pre-payments for supplies.
EU-hosted talks were adjourned after running late into the night, Russian Energy Minister Alexander Novak and the head of Russian gas exporter Gazprom told Russian news agencies.
The talks will resume on Thursday if Ukraine and the EU have a firm financing deal in place, Gazprom head Alexei Miller said.
They have reached agreement on the price Kyiv will pay for gas over the winter, the amount to be supplied and the repayment of some $3.1 billion in unpaid Ukrainian bills.
However, Moscow, which cut off deliveries on June 16, wants legal assurances that Kyiv can pay some $1.6 billion for new gas up front.
European gas inventories, particularly for the TTF gas trading hub in the Netherlands, were well-filled and large enough to prevent gas deficits and TTF prices will remain under pressure next year, ABN Amro analysts said in a research note.
Britain’s storage sites were 99.88 percent full on Thursday, while the Netherlands’ were 98.05 percent full, according to Gas Infrastructure Europe.
In Britain’s power market, prices for delivery on Friday fell by 8 pounds or 16 percent to 43.20 pounds per megawatt-hour, eroding gains made on Tuesday when prices jumped 22 percent on expectations of tight power supply this winter.
Copyright Reuters, 2014