The largest deliveries of liquefied natural gas cargoes to the U.K. in a year are sending prices for the day-ahead fuel in Europe’s biggest market to a sixth monthly decline, the longest losing streak since at least 2007.
The day-ahead contract on the National Balancing Point gas hub dropped to the lowest since October 2011, heading for an 8.2 percent drop this month, broker data compiled by Bloomberg showed. Ten cargoes from Qatar arrived at the U.K.’s South Hook terminal this month, the most in a year, according to port authorities and ship-tracking data on Bloomberg.
LNG arrivals are helping offset reduced flows due to annual gas field maintenance as well as cooler-than-normal weather across northwest Europe. Supplies are set to exceed demand by 10.6 million cubic meters by 6 a.m. tomorrow, according to National Grid Plc, the network operator.
“We have seen that LNG input is strong and with six tankers over the next two weeks, one would say this is set to remain or push even lower,” Nick Campbell, an analyst at consultant Inspired Energy Plc in Kirkham, England, said by e-mail today. This week was “the first time we saw potential supply side issues with maintenance.”
Day-ahead gas dropped to as low as 42.25 pence a therm ($7.07 per million British thermal units) before trading down 1.4 percent at 42.75 pence a therm as of 4:30 p.m. in London, broker data show.
Fuel for July delivery fell 0.3 percent to 44.18 pence a therm on the ICE Futures Europe exchange in London. Dutch gas for day-ahead delivery on the Title Transfer Facility hub slid as much as 1.7 percent to 18.18 euros ($24.76) a megawatt-hour.
Planned maintenance at fields and facilities in Norway curbed supply from the U.K.’s biggest foreign supplier. ConocoPhillips has had four unplanned outages at its J-Block field in the North Sea this month.
Three LNG tankers are currently scheduled to arrive in the U.K. next month and two are expected to dock at Belgium’s Zeebrugge.
Gas withdrawals from U.K. storage sites increased after the within-day price premium to the front-month contract rose to the highest in more than a year, prompting traders to sell inventories to take advantage of the gap. Withdrawals jumped to 24 million cubic meters yesterday, the most in two months, Brussels-based Gas Infrastructure Europe and broker data showed.
“Increased withdrawals from medium-range storage sites pushed the system into balance” yesterday, Wingas U.K. Ltd. said in an e-mailed report.
Withdrawals increased even as European Union Energy Commissioner Guenther Oettinger, Russian Energy Minister Alexander Novak and Ukrainian Energy Minister Yuri Prodan met today in Berlin for talks on payments for gas. The dispute threatens deliveries of Russian fuel bound for the EU, about half of which goes through Ukraine.
Ukraine transferred $786 million to pay for February to March gas supplies, Oettinger said after the Berlin meeting today, where no deal was reached. Russia needs to be sure Ukraine will keep paying for gas, Russian Prime Minister Dmitry Medvedev told reporters in Minsk, Belarus.
U.K. demand, including exports, storage and power generation, is forecast at 191 million cubic meters through 6 a.m. tomorrow, in line with the seasonal norm, according to National Grid data. Flows into the system were at 197 million cubic meters today, in line with a 10-day average.
Norwegian flows to the U.K. are at 49 million cubic meters, up from as low as 15.5 million cubic meters on May 28, Gassco AS data show. Imports from the Netherlands via the BBL pipeline linking the two countries were more than 50 percent below the 30-day average as Dutch gas for day-ahead delivery was more expensive than the fuel in the U.K. for a fourth day.
Exports to Belgium were nominated at 26.9 million cubic meters today, down from 28.4 million cubic meters yesterday, according to data from Interconnector (U.K.) Ltd.
Average temperatures in the U.K. and northwest Europe will be 15.3 degrees Celsius (60 degrees Fahrenheit) next week, compared with a seasonal norm of 16 degrees, according to WSI Corp. data using the ECMWF model at 6:55 a.m. Temperatures will be below normal in much of central and eastern Europe through the weekend, MDA Weather Services said in an e-mailed report yesterday.