UK Natgas

February 27, 2019

The Research Team reviews the UK Natgas market

 

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27 February 2019

  • Our supply metric shows a sharp decline for the next 5 to 10 days. Supply will therefore be below average, partly in response to low demand predictions. De-stocking rates are well below their historical level, also supporting a low demand profile. This is in part related to the very late peak of the re-stocking phase. LNG volumes towards th UK continue to exhibit very high figures (comparable to Q4’18).
  • The forecast of a poor demand has to do with above average temperatures over the UK. While record-breaking values have been observed during the past few days, temperatures are set to gradually decline and re-converge towards the climatology of the period. On the other hand, winds will keep increasing, pushing down the gas/wind spread for power generation.
  • Macroeconomic conditions continue to show a negative trend. While the PMI has been floating just above 50, both our business expectation index (latest value: Jan’19) and the UK industrial production are far from reassuring. The latter in particular has exhibited the worst quarterly performance in Q4’18.

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