Mild weather and high wind generation cut aggregate UK gas demand (including for exports) by 1.17 bcm (13%) y/y to 7.80 bcm in November, aided by an 8% y/y fall in HDDs, although they were 4% higher than the past five-year average.
UK end-user consumption was 7.28 bcm, down by 1.12 bcm (13%) y/y. In an ongoing trend, gas into power fell y/y thanks to lower power demand and as renewable output increased its share of the generation mix, curbing thermal generation. The UK power sector's call on gas was 0.28 bcm (13% y/y) lower y/y at 1.85 bcm. Gas-fired power generation dropped by 1.27 TWh (10%) to 11.48 TWh, while wind generation rose by 1.42 TWh (64%) y/y to 3.66 TWh.
Total supply to the UK was down by 8% (0.69 bcm) y/y to 8.30 bcm in November as a small uptick in LNG sendout was offset by lower continental pipeline imports. Dutch exports to the UK totalled 0.29 bcm, down by 0.62 bcm (68%) y/y. Dutch output was again lower last month owing to a stricter Groningen cap and the milder weather, with the drop in supply buoying TTF prices and discouraging continental flows to the UK. Net IUK exports to Belgium were just 4.2 mcm/d in November, down from 19 mcm/d last year. Norwegian exports to the UK were 3.74 bcm, just 50 mcm (1%) more y/y.
UKCS flows were once again up y/y last month, owing to the ramp up of the Cygnus field which came online in December 2016. North Sea deliveries to UK terminals were up by 0.21 bcm (7%) y/y at 3.33 bcm. LNG deliveries into UK ports slowed y/y in November, but sendout edged up by 30 mcm (10%) y/y to 0.32 bcm because fast receipts in October left stocks much higher y/y. LNG stocks were 84% full on 1 November and ended the month at 62% capacity. Strong Northeast Asian demand continued to support LNG spot prices, encouraging 0.07 Mt of UK reloads in November, according to Kpler.
The UK made a net withdrawal of 0.30 bcm in November, leaving stocks at 1.50 bcm, down by 0.85 (45%) bcm y/y. Given our December forecasts, we expect UK stocks will be 1.31 bcm on 1 January.
Over Q1 18, we forecast that UK end-user demand will be up by 0.49 bcm y/y, although that is based on a return to normal temperatures and forecasts are for a colder January. The arrival of 0.55 bcm more LNG y/y and pipeline imports up a modest 0.03 bcm y/y in Q1 18 would see the UK taking 0.65 bcm out of storage over the quarter, leaving storage inventory levels at 0.6 bcm at the end of March.
For summer 2018, we forecast that LNG imports will grow by 1.1 bcm (27%) y/y given expected incremental LNG, pipeline imports will fall by 0.82 bcm (6%) y/y, while exports to the continent rise by 1.0 bcm (12%) y/y.