Important UK Gas Storage Facility Could Be Depleted By Mid-March

Rough, the UK’s long-range gas storage facility will be empty by mid-March if it continues to churn out gas at full capacity. According to National Grid date this has raised concerns in the market and played a part in an increase in prices.

This facility is heavily relied upon to supply the gas market throughout winter. Even more so in 2012/13 as LNG deliveries have been thin due to more attractive prices in Asia and South America.

Gas for March delivery was valued at 63.05 p/th at the end of December however the contract was pushed to 69.60 p/th by the last day of trading in February aided by concerns over supply.

Additional strain has been put on the on supply as the UK has been hit by colder-than-normal temperatures in recent weeks.

The Met Office has forecast milder temperatures for the first two weeks in March although market players have raised concerns over the depleting stocks. A market analyst has said it will have to be replaced with something but it is difficult to see where the extra supply will come from with imports already high. Medium-range facilities are low being only between 20 and 25% full.

Rough continued to withdraw gas at full capacity rates on Friday and the day-ahead contract was valued at 70.50 p/th. This is more than 2.7 p/th higher than average price throughout January and February.