June 21 (Bloomberg) -- U.K. natural gas for same-day delivery dropped to the lowest in more than 20 months after supplies from Norway surged and temperatures remained above normal for the time of year.
The within-day contract fell as much as 29 percent to 42 pence a therm at 5:05 p.m. in London, the biggest drop since March 5 and the lowest price since Oct. 5, 2011, according to broker data compiled by Bloomberg.
“This is a very, very unusual day,” said Craig Lowrey, a consultant at The Utilities Exchange Ltd. in Ipswich, England, which helps companies procure power and gas. “To see such an aggressive downward move on a normal trading day is something I can’t recall seeing before.”
U.K. gas for next-month delivery has been 17 percent more expensive so far in 2013 compared with the same period last year as Britain struggled to attract liquefied natural gas cargoes to help offset falling North Sea production. The nation’s pipeline network was set to contain the most gas at 6 a.m. tomorrow since Feb. 2012, according to National Grid Plc.
Gas flows into Britain from Norway rose to as high as 98 million cubic meters a day today before dropping to 62 million, in line with the average for the past 30 days, according to data from Gassco AS, Norway’s pipeline operator. The Norpipe from Norway into Germany shut for three weeks starting June 3, cutting flows into the Emden gas terminal.
The U.K.’s pipelines will contain 362 million cubic meters at 6 a.m. tomorrow, the highest level since Feb. 8, 2012, compared with 340 million at the start of today, National Grid said.
Demand will be 186 million cubic meters today, according to National Grid. That would be the lowest since Oct. 4.
With demand below 200 million cubic meters a day the past few days, prices were “overinflated” and should be below 60 pence, Eddie Proffitt, chairman of the natural gas group at the U.K.’s Major Energy Users’ Council, said today by phone.
The average U.K. temperature for the balance of today will be 16.1 degrees Celsius (61 Fahrenheit), compared with a seasonal normal of 12.2 degrees, according to MetraWeather data using the GFS model on Bloomberg at 5:24 p.m.
Day-ahead gas dropped 6.1 percent to 55 pence, according to broker data. The month-ahead contract fell 0.6 percent to 63.18 pence.
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