Colder weather, reduced liquefied natural gas (LNG) send-out from terminals into the U.K. gas network and an escalation in the Ukraine/Russia conflict lifted European natural gas prices in late August according to data released by Platts.
“U.K. spot natural gas prices briefly dipped under 35 pence per therm (p/th) in mid-July, but rose 8% month over month in August to an average 40.60 p/th on the back of cool temperatures and lower LNG supply,” said Platts energy analyst Alex Froley.
Prices of day-ahead natural gas at continental Europe’s most liquid natural gas trading hub – the Dutch TTF – rose 6% last month.
Platts Managing Editor Andreas Franke said “European spot gas prices hit a near-four month high September 1, pushing power prices up 12% in the U.K., where the price-determining production unit is usually gas-fired. German power prices, however, actually fell that day on the back of rising wind and solar output.”
On the demand front, daily average European gas needs in August fell 6% from the preceding month, dropping to 404 million cubic meters per day (cu m/d) from 430 million cu m/d in July. This was less than the 11% decline from July to August in the previous year.
“A decline in consumption from July to August might be expected because of holidays in much of Europe in August,” said Franke, “which could reduce both gas and power demand, and therefore gas-to-power demand, from consumers.”
“Local grid demand for heating picked up to 60 million cu m/d from 53 million cu m/d in July, while by the end of the month Qatari LNG send-out had dropped to 30 million cu m/d from an average 44 million cu m/d the month before,” added Froley.
Press Release, September 3, 2014; Image: MHPA