UK Natural Gas

August 10, 2017

The Research Team gives its view on the UK natural gas market


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7  August 2017

  • Pipeline gas has substantially decreased on an y-on-y basis after several weeks in positive territory. The trend affected both imports and domestic production.
  • Likewise, LNG volumes have been below 1500 GWh/week (last couple of weeks). The overall scenario has been associated with a significant supply tightening.
  • The coupling between crude and NBP is has been gradually strengthening during the past two weeks (and even more so for NBP).
  • The exceptional heat wave that affected most of the Mediterranean regions will be wiped away by a cut-off low which is about to travel across central Europe (next few days).
  • Temperatures are expected to be below average over western / central Europe, including the UK. The associated HDDs are predicted to further increase during the next 5-7 days.
  • Wind are forecasted to be lighter than the previous week – this will lead to an increase of our gas / wind spread (i.e. more demand for electricity production).
  • The macroeconomic conditions remain overall supportive of a bearish development.
  • The PMI (July data) has moved above 54, however it remains below the peak recorded back in December 2016.
  • Our Business expectations oscillator has also moved in positive territory – this currently is the only indicator (out of four) supporting a positive price development.
  • Both industrial production and the energy intensity index are on a downward trend.