LONDON (Reuters) - British wholesale gas prices fell by up to 20 percent on Monday, undermined by major gas shipments due from Qatar and Trinidad to help replenish stored gas reserves depleted by weeks of abnormally cold weather.
The price of gas for weekend delivery fell about 20 percent to 84 pence per therm, while the day-ahead gas contract slumped to 93.50 pence, a drop of around 11 percent.
A late blast of winter weather has drained Britain’s already modest gas stocks to around a 10th of their capacity, sparking fears of supply restrictions with the cold weather forecast to continue into early April.
Low inventories combined with cold weather forecasts spurred gas prices towards record highs last week, but the announcement that three liquid natural gas (LNG) deliveries are due to arrive in the Britain by April 3 has dented sentiment.
Two shipments from Qatar are due to unload at UK import terminals this week, arriving on Monday and Friday, respectively, while a shipment from Trinidad should arrive on April 3, ship-tracking data from AIS Live on Reuters shows.
A cargo from Qatar aboard the Mekaines arrived at the Isle of Grain terminal in Kent over the weekend and is currently unloading supplies.
“The market is less worried by low storage levels right now given the arrival of new LNG tankers this week...there’s plenty of gas around is the feeling,” one gas trader said.
Britain’s gas market was oversupplied by around 10 million cubic metres (mcm) on Monday morning, with demand at 373 mcm running nearly 40 percent above average levels, data from National Grid showed.
Traders re-injected gas into storage sites over the weekend, preventing stock levels dropping below 10 percent full, although withdrawals continued at the start of the working week.
Britain’s biggest such facility, Rough, flowed 24 mcm while the long dormant Dragon LNG terminal in Wales resumed pumping gas at rates of 12 mcm, boosting supplies and relieving strain on other infrastructure.
Sources said the Trinidad LNG cargo was likely heading into the Dragon terminal.
Imports from Belgium steadied at around 60 mcm. Norway flowed about 113 mcm in total.
“Total imports are up from Friday’s average due to increases in flows from Belgium and the Netherlands and LNG send outs from Dragon,” analysts at Thomson Reuters Point Carbon said.
Reporting by Oleg Vukmanovic. Editing by Jeremy Gaunt.