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Our market view - week 43

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UK gas prices rising on supply concerns



Supply concerns continue to push prices higher as weather forecasts predict colder weather than expected for Britain and mainland Europe. The high reliance on Norwegian volumes for meeting marginal seasonal demand is creating more support for day-ahead prices. Norwegian flows to the UK have increased in line with seasonal demand increases to almost full capacity. LNG send-out is low and few LNG cargoes are currently bound for Britain, limiting the supply flexibility.

Underlying demand has been and remains poor with little hope of stronger demand due to high gas prices compared to coal and renewables, weak economies and the increasingly efficient use of gas that is consumed.

UK coal-fired generation is at multi-year highs. Wind and solar generation was strong in Germany during October, and co coal-fired generation increased.