The UK is bracing for a blast of Arctic weather, boosting demand for natural gas and testing the country’s energy networks in the final weeks of winter.
(Bloomberg) — The UK is bracing for a blast of Arctic weather, boosting demand for natural gas and testing the country’s energy networks in the final weeks of winter.
Bitter weather conditions are forecast across the country over the coming days, “with further snow, ice, wind and then rain likely later in the week and into the weekend,” the Met Office said. Snow and ice warnings have been extended through Friday for large parts of the UK, including London.
Britain’s day-ahead power contracts advanced. Day-ahead gas prices declined, though not by as much as their equivalent on the continent.
The UK’s forecast gas demand has risen about 4% since last Friday, data from National Grid show. Yet, the country’s exports to mainland Europe were halted over the weekend due to a pipeline incident, meaning more fuel can remain in the UK — even as some facilities that deliver gas to the country’s market are affected by outages.
Temperatures could drop as low as -15C overnight in parts of Scotland, and a cold weather alert for England is likely to be reviewed in the coming days, according to the Met Office.
“From Wednesday, the focus of further snow is across parts of southern England and south Wales,” Steven Keates, the weather agency’s deputy chief meteorologist, said in a statement. “Through Thursday and Friday the snow risk spreads to central and northern areas of the UK.”
Read More: Exports Via Key UK-EU Gas Link Halted During Winter Cold Snap
While the northern tier of mainland Europe is also set to see unusually low temperatures, the market seems to be shrugging off a potential increase in gas consumption — at least for now. That’s largely due to higher-than-usual fuel inventories in the European Union. LNG imports also remain strong as the US is shipping a record amount of the fuel with the restart of the Freeport LNG plant in Texas.
“With a little under a month left of winter, the upside demand risk from a prolonged spell of cold weather is diminishing,” Timera Energy said in a note. “Europe looks set to end winter with over 50% of gas in store even if March temperatures outturn below normal.”
Still, there’s a chance that gas networks in the region could be pressured in the coming days.
Strikes at Electricite de France’s hydropower units added a small strain to that country’s system. About 460 megawatts of capacity were unavailable on Monday morning, grid operator RTE said in a notice. The restriction on production is likely to continue through Tuesday.
Day-ahead power prices in the UK gained 1.8%. Prompt gas slipped 2.3% by 1:58 p.m. in London, while the Dutch equivalent dropped 5.6%.
Front-month gas futures tumbled both in the UK and mainland Europe. German month-ahead power fell by 4.3%.
–With assistance from Todd Gillespie and Elena Mazneva.
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