A brief cold snap in October was met comfortably by stronger Norwegian imports and a substantial increase in LNG deliveries. Nine tankers arrived in October, the largest volume of LNG for 18 months. LNG sendout hit the highest level since the Beast from the East in March.
Below seasonal-normal temperatures pushed domestic LDZ demand above 200mcm to its highest October level for ten years. With home heating ramped up, LDZ consumption doubled in the last week of the month. However, a strong supply response kept the gas system balanced and medium-range storage stocks, while utilised, remain healthy.
Furthermore, temperatures have risen strongly this week and above seasonal-normal conditions are forecast for at least the next two weeks. Very strong winds for the rest of this week will also cut the use of gas in the electricity sector, while LNG arrivals continue.
Four tankers are already booked for November. Expectations of further supply, coupled with lower demand have pushed Summer 19 contracts to lows not seen since August, reversing the strong gains seen during September.
Electricity prices continued to move lower last week, echoing downward moves seen across the fuel mix. Forward power contracts fell 2-3% across the curve last week, weakened by lower cost of generation, following recent declines in gas, oil and coal and carbon. 2019 coal prices fell 3% in the last week, breaking below their previous October lows. Losses in electricity were heaviest on the Day-ahead market, which fell 8% across the week, returning to £61/MWh on forecasts of stronger winds and lower demand this coming week.
Echoing movements in the gas market, the Summer 19 contract has fallen to lows last seen in August, reversing the gains from September, while longer-dated seasonal contracts, particularly 2020 prices remain within their October range.
Having peaked at over 47GW last week, power demand is forecast to fall this week, reaching highs of just 43GW. Very strong winds, forecast at up to 10GW from Tuesday onwards, will increase embedded generation, reducing demand from the transmission grid.