Unseasonably mild demand and high stocks pressure gas prices
Due to high temperatures, UK demand is around 26% below last year. Russian gas flows continue to show year-on-year growth, countering decreases in Norwegian and Dutch supply and making it less attractive to withdraw gas from storage. UK gas prices are 12% below the level from the beginning of the year.
Forward prices also drop as there is little worry about supply into the end of the winter. UK storage sites are 56% fuller than a year ago at 2.7 bcm – the fullest at this time of the year since February 2007. Traders expect any rise in demand to be easily met by reserves and that injections will be small over the summer.
East Asian LNG prices have climbed above 20 USD/mmBtu on rising Japanese gas demand due to cold weather and economic recovery.
UK gas storage levels in million cubic meters (Source: ICIS Heren)