Industry News

• Marketwatch: Turbulent weather, turbulent gas prices

  18 Jan 2010

  The UK gas market has experienced an unstable start to 2010, with National Grid issuing a total of four gas balancing alerts over the past fortnight. The alerts were triggered on the back of high demand levels and concerns regarding supplies from the continent following severe weather conditions. The only previous alert was issued four years ago, in March 2006.

  
  High demand for gas on 4th January pushed prices higher on the spot market, as within-day prices edged over 53p/therm following reduced flows from Norway, on the back of production difficulties at the Troll gas fields. Further technical difficulties were reported in Norway on 7th January, which led to the second balancing alert being issued, while the 3rd and 4th alerts were issued on 9th and 11th January respectively following further gas production difficulties.

  
  The balancing alert is a warning to the industry that it should increase supplies and look at ways of cutting back on demand. The recent alerts can be viewed as a success as they achieved their objective of raising supply levels: increased flows were imported via Belgium and Holland, while LNG injections added further strength to the system.

  
  As demand levels edge down on the back of improved weather forecasts, the outlook for gas prices is similar to that of December 2009: Ample supply and reduced prices on the spot market, owing to decreased demand on the back of a faltering economy. However, further alerts may be issued in the event of more low temperatures and technical difficulties from suppliers on the continent.