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(Bloomberg) — Britain boosted natural gas exports to the European Union this week, as ample supplies allowed traders to take advantage of a widening premium for spot prices on the continent.
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Flows through the Interconnector pipeline that connects the UK to Belgium jumped to the highest in over a year in recent days, according to grid data. That came as day-ahead prices for Europe’s benchmark gas in Amsterdam were more than €4 a megawatt-hour more expensive than in the UK, hitting the biggest gap since August 2024, broker data compiled by Bloomberg show.
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Traders closely watch regional spreads in Europe to gauge demand shifts and potential diversions of flexible liquefied natural gas cargoes, on which the region relies heavily on. UK gas is typically cheaper during warm months, when it exports to the EU as it has spare LNG capacities and lacks underground storage sites to stockpile the fuel.
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The discount for UK gas widened lately as unseasonably mild weather and relatively strong wind generation curbed fuel demand, while the country has seen a ramp-up in both LNG arrivals and pipeline flows from Norway recently.
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That happened “in time for what would normally be the onset of proper heating demand, and with limited capacity to absorb any short-term surplus into storage, the UK is exporting the excess to continental Europe,” Energy Aspects Ltd. analyst Matt Drinkwater said.
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Temperatures are forecast to fall in Britain next week, raising the prospect of exports easing. Yet the country could still maintain flows if France — which takes some volumes — continues to see constraints at its LNG terminals, according to Nick Campbell, a managing director at energy advisor Inspired Plc. Three out of four French import facilities have had issues since September due to strikes and a pipeline outage in the south of the country.
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“If the situation isn’t resolved in France then the spread is likely to remain to incentivise exports, but the outright prices will likely increase,” Campbell said.
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UK gas futures for December delivery are currently trading at a small premium to Europe’s benchmark.
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