UK gas prices for immediate delivery posted the the biggest weekly decline in five years as works on a pipeline to mainland Europe damp demand for the fuel.
Prices fell as much as 40 percent from last week’s levels as maintenance on the Interconnector link with Belgium restricted exports, undermining demand already hurt by the prolonged shutdown of Britain’s biggest gas storage facility. On top of that, above-normal temperatures across Europe eased the need for heating. Prices in the Netherlands, a rival trading hub to the UK, also fell.
That’s a turnaround from the previous week when gas markets soared as a diplomatic crisis around Qatar broke out in the Gulf, spurring concerns that shipments of liquefied natural gas from the biggest producer would be restricted. Supply pressures have since eased with two tankers taking a longer route to the UK around Africa instead of through the Suez Canal.
“Demand on the prompt market is easing across Europe as temperatures are rising and it doesn’t appear that the diplomatic issues in the Middle East regarding Qatar will cause LNG supplies to be disrupted noticeably,” Energi Danmark AS said in a report Friday.
Britain’s demand for the fuel fell to the lowest level since August on June 14, according to National Grid Plc data. The UK-Belgium Interconnector will be shut until June 29. The closure of the Rough gas storage facility means it’s unavailable for restocking, which usually helps shore up demand during the spring and summer.
Gas for same-day delivery fell 18 percent this week, the most since February 2012, after rebounding on Friday. Prices are still the lowest for the time of year since 2009, broker data on Bloomberg show. The contract advanced 1.1 percent a week earlier. Ten-day volatility increased to the highest levels since October.
Day-ahead gas on the Title Transfer Facility in the Netherlands fell 0.7 percent this week.
Temperatures in northwest Europe are about 1 degree Celsius (1.8 Fahrenheit) above the 10-year average on Friday.