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Bloomberg
There’s beautiful weather across most of Europe, which won’t please natural gas sellers. Mean temperatures in northwest Europe are set to be more than 20 degrees Celsius (68 Fahrenheit) this weekend, 5 degrees above the 10-year average. Same-day gas in the UK, a European benchmark market, has fallen for eight sessions, its longest declining streak in almost a decade.
Blame the sunshine. A string of warm, sunny days has pushed British demand for gas below the five-year average for most of the past two weeks. It’s also increased available solar power to a record high, reducing the need for gas in power generation.
“It’s all fundamentals,†said Jade Kalinowsky, a senior trader at Fredericia, Denmark-based utility Dong Energy A/S. “Normal demand today should be 212 million cubic meters and it is forecast to be 168 million cubic meters.â€
Same-day gas in the UK fell 1.6 percent to 36.1 pence a therm ($4.64 per million British thermal units) at 1:12 p.m. London time, extending its drop this month to 12 percent, compared with no change in the same period last year, according to broker data compiled by Bloomberg since 2007. Longer-term contracts rose with commodities benchmark Brent crude.
Adding to the short-term contract plunge is the lack of the Rough gas storage facility, which is offline for repairs until at least next year and so unable to soak up surplus supply. Market participants inject fuel into the site for use in winter during warmer months, including May.
Most traders are bearish front-month gas as additional liquefied natural gas sails to the region. Seven LNG cargoes are currently scheduled to arrive in northwest Europe through the first 10 days of June.