Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
“By the end of this month we will be awash with LNG”
The UK’s gas and power markets continue to limbo dance through the summer, giving no indication of just how low they actually can go.
As gas prices faltered with the start of an early spring, traders thought they knew.
At the time, I heard a range of answers, from 40 pence per therm to 45 pence per therm at which point, in theory, increased demand for gas as a power generation source would cause prices to stabilise.
But here we are, more than 15 per cent lower than where the market guessed the floor might be, at four-year lows, despite burning more gas than we have done in years.
Anyone who thought market fundamentals might stem these steady losses, obviously wasn’t looking at the big picture.
And by “big”, I mean “global”. Japan’s ample storage stocks and lower than normal forecasts for summer demand have made the UK market more attractive for summer LNG cargoes than it has been since Japan’s nuclear disaster in 2011 made it the most profitable destination for Qatari gas. By the end of this month the UK is expected to be absolutely awash with the stuff.
So now where do traders say the floor price is?
Unsurprisingly, fewer people seem willing to give a number. What they will give is a month: September. By then, storage facilities will be filled to the brim across Europe, while LNG cargoes might still be rolling in.
Until then, the only thing I’m told for sure is: we’re not at rock-bottom yet.
Please login or Register to leave a comment.