UK gas system tightens – Y Report

Unplanned gas outages on the UK Continental Shelf have reduced domestic supply and tightened the system, according to Inenco’s Y Report. However, this is likely to be mitigated by rising prices lowering […]

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By Jonny Bairstow

Unplanned gas outages on the UK Continental Shelf have reduced domestic supply and tightened the system, according to Inenco’s Y Report.

However, this is likely to be mitigated by rising prices lowering IUK – the natural gas pipeline to Europe – demand.

Unplanned outage at Hinkley Point B7 reactor means the nation’s total offline nuclear capacity is now at 1.5GW.

Energy Trader Dorian Lucas states wind generation is up to 4GW of capacity which should mitigate the nuclear losses.

Oil prices have seen supply and demand fundamentals change as OPEC production is high and US drilling is increasing.

 

Seasonal prices have been volatile but are now falling back to pre-Rough announcement levels.

Mr Lucas adds: “Looking at the trend in the market, it is still definitely trending upwards for both UK gas and power. However oil prices are trading counter to that and continuing to soften at the moment so that poses some downside potential for UK gas and power prices going forwards.

“Customers looking to place a fixed price contract, I’d make sure you hold at the moment, look out for this turn in the market and make sure you’ve definitely got your route to market identified.

“For customers with flexible contracts, it’s down to your current hedge level. For those customers who haven’t traded an awful lot, definitely treat this downturn in prices as an opportunity for you to increase your hedges.”