May 2, 2018 / 3:45 PM / 6 months ago

UK GAS-Prices turn negative on expected LNG supplies, weaker coal

(Updates throughout)

LONDON, May 2 (Reuters) - British wholesale gas prices retreated on Wednesday as anticipated liquefied natural gas (LNG) arrivals in France and Belgium, as well as falling coal, weighed on Continental prices.

* Day-ahead gas price down 0.25 pence at 53.10 pence per therm at 1530 GMT, having earlier traded as much as 0.75 pence higher than Tuesday’s close.

* Day-ahead gas price at the Dutch TTF hub edged down by 0.15 euro to 20.30 euros per megawatt-hour, having reached 20.45 euros earlier in the day.

* “(UK gas) is a price-taker from the Continent this summer to a large extent, driven by the closure of Rough storage in the UK and a need for the continental storages to fill quickly,” Thomson Reuters gas analyst Oliver Sanderson said.

* Benchmark European AP12 coal futures for 2019 tumbled on Wednesday, trading 1.76 percent lower at $82.50 a tonne.

* Gas prices need to ensure they stay competitive with coal to be used as feedstock for power stations, so tend to move in tandem.

* Added to that, Norwegian gas exports via the Langeled pipeline to Britain increased throughout Wednesday and amounted to 57.62 mcm/d by 1530 GMT compared to 44 mcm/d earlier in the day.

* Even so, the UK gas system was undersupplied by 7.9 million cubic metres (mcm/day) by 1500 GMT, with demand forecast at 222.4 mcm compared with supplies seen at 214.5 mcm.

* Within-day contract was still up at 53.10 p/therm after Norwegian flows were reduced along the Langeled pipeline.

* Flows into the St Fergus NSMP terminal fell to 15 mcm from 23 mcm/day on Tuesday, linked to a planned maintenance shutting down flows from Norway via the Vesterled pipeline.

* Heating demand for gas is projected to drop by 22 mcm/day with temperatures expected to climb back towards 13 degrees Celsius on average from the weekend.

* There was no concrete data yet showing any LNG tanker arrivals in Britain for May after nine cargoes discharged in April, the highest level in a year.

* The June contract fell 1.05 pence to 50.60 p/therm.

* Benchmark Dec-18 EU carbon contract was down 0.30 euro at 13.09 euros per tonne. (Reporting by Oleg Vukmanovic and Sabina Zawadzki, editing by Nina Chestney)

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