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UK NBP natural gas prices falling on higher LNG sendout

http://www.chemnet.com   Aug 31,2015 Platts
Day-ahead gas prices in the UK National Balancing Point (NBP) market have been falling since a recent rise in LNG sendout from the South Hook LNG Terminal, data from Platts and National Grid showed Friday.

Sendout rates from LNG terminals have risen 120% since the beginning of the month, to 53.67 million cubic meters/day Wednesday from 24.43 million cu m/day on August 3.

At the same time, day-ahead NBP prices have fallen 9%, or $0.577/MMBtu, to close at $5.943/MMBtu Wednesday.

The higher sendout rates have coincided with increased LNG deliveries compared with June and July. With the arrival of a Qatari Q-Max Thursday, LNG imports for August reached 1.28 Bcm, compared with 0.73 Bcm in June and 0.89 Bcm in July.

With the increase in UK regasification rates, the spread between UK NBP prices and those in gas hubs elsewhere in Europe has fallen.

In July, the average spread between Platts assessed day-ahead UK prices and those in the Dutch gas market (NBP-TTF) averaged $0.04/MMBtu. On Wednesday, the spread was minus $0.44/MMBtu.

As the spread between gas prices in the UK and continent has fallen, exports from the UK to Belgium have increased 135% to 55.12 million cu m/day Wednesday, from 23.50 million cu m/day at the start of the month.

Even with exports to the continent on the rise, the net volume of gas entering and staying in the UK system from LNG regasification has been increasing at a faster rate.

Since August 17, the rate of sendout has outstripped continental exports by an average 10 million cu m/day.

Since then, the NBP-TTF day-ahead spread has fallen further, from minus $0.05/MMBtu on August 17 to a low for the month of minus $0.519/MMBtu Monday.
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