U.K. Gas Erases Gains as Crude Drops Amid Mixed OPEC Signals

U.K. natural gas reversed gains as crude extended declines amid mixed signals from OPEC on whether the group will agree tomorrow to cut oil supply to aid prices.

Front-month gas in the U.K., Europe’s biggest market, fell as much as 1.6 percent on the ICE Futures Europe exchange in London. The day-ahead contract slumped the most in three weeks on the National Balancing Point hub. Dutch gas for December lost as much as 1.4 percent on the Title Transfer Facility hub.

Brent, to which many gas contracts are linked in mainland Europe, fell for a third day as Saudi Arabia’s oil minister said the crude price will stabilize by itself, while the United Arab Emirates said OPEC will do what it takes to balance the market. Saudi Arabia yesterday failed to reach agreement with Russia, Venezuela and Mexico on curbing output. Iran’s oil minister said his nation’s position is close to that of Saudi Arabia.

“Prices across the NBP have seen substantial reductions over the course of the morning, in a potential correction from the sharp gains seen earlier this week,” Marcel Boonaert, head of trading at Wingas U.K., said in an e-mailed note. “Oil prices continue to shed value, with a reduction in production from OPEC countries and Russia looking less likely.”

Front-month U.K. gas dropped 0.6 percent to 59.1 pence a therm ($9.33 a million British thermal units) on ICE by 3:50 p.m. in London. The December contract expires tomorrow. Futures trading volume was 91 percent above the 100-day average for this time of day. The NBP day-ahead contract fell as much as 2.3 percent, the most since Nov. 5, broker data showed.

Vienna Meeting

Dutch gas for December slid 0.4 percent to 24.60 euros ($30.76) a megawatt-hour, according to broker data compiled by Bloomberg. Brent futures declined 0.9 percent to $77.63 a barrel on ICE. The 12-member Organization of Petroleum Exporting Countries meets tomorrow in Vienna to discuss its official production target.

Temperatures in the U.K. are forecast to exceed seasonal norms this weekend after dropping below the 10-year average today, according to WSI Corp. data on Bloomberg using the GFS model. Temperatures in Europe will be as much as 3 degrees Celsius (5.4 Fahrenheit) above norms next month, MetraWeather said in a report yesterday.

Total flows into the U.K. system increased to 291 million cubic meters from as low as 258 million cubic meters earlier today, data from grid operator National Grid Plc showed. There will be 335 million cubic meters of gas in the U.K.’s pipelines at 6 a.m. London time tomorrow, 10 million less than at the start of today.

Demand is forecast at 282 million cubic meters in the 24 hours through 6 a.m. London time tomorrow, 11 million cubic meters more than the seasonal norm, grid data show.

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