UK gas prices have fallen back this week – although they are still some 400 percent higher than at the start of 2021.  And the reasons for the fall in price should not breed complacency.  First, the arrival of a south-westerly airflow off the Atlantic has finally begun to spin those offshore wind turbines after last week’s doldrums.  At the time of writing, wind is supplying 28.5 percent of our electricity, allowing gas to fall back to 27.4 percent, and for coal plants to be switched off – although nuclear is being run flat out at 20 percent, reflecting the still too high price of gas.  With stronger winds forecast for next week, demand for gas may fall even further.  But the winter is only just beginning, and it is doubtful that we will get through January, February and early March without at least one more week of cold, still, high pressure air.  And if we are unlucky, we could face several weeks in a row.

The second reason for the lull in price is worrying for a more complicated reason.  On Wednesday, Marwa Rashad at Reuters reported that:

“At least ten cargoes of liquefied natural gas (LNG) have recently been diverted from Asia to head west drawn by Europe’s record high prices amid supply concerns ahead of peak winter demand, industry sources said…

“In addition to the above cargoes, a U.S. cargo onboard Marvel Crane had headed toward Panama bound for Asia before being diverted northeast and now signalled it was bound for the UK’s South Hook terminal, according to ICIS LNG Edge.

“Data Intelligence firm Kpler said it has listed more tankers diverting towards Europe from Asia and Other destinations like Brazil including British Contributor, Tembek, LNGShips Manhattan, LNG Alliance and are eying two more for possible route change.

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