LONDON: British prompt wholesale natural gas prices climbed on Monday morning as low imports and reduced domestic flows created a tight system.
Gas prices for Monday delivery were up 7.08 percent to 48.40 pence per therm by 0813 GMT, having hit an intra-day high of 48.50 pence. Day-ahead gas for Tuesday delivery was up 6.22 percent at 47.85 pence.
Britain's gas system was undersupplied by around 26 million cubic metres (mcm), with demand forecast at around 166 mcm and flows at around 140 mcm, National Grid data showed.
Low imports from the Netherlands, coupled with reduced flows from the UK Continental Shelf (UKCS), have led to the tightness, traders said.
The large shortfall of gas will lead to higher withdrawals of gas from storage, traders said. Britain's gas storage facilities are currently 97 percent full, according to Gas Infrastructure Europe.
Over the weekend, the amount of gas received by UKCS terminals dropped to zero from 13 mcm/day due to maintenance at Shell's St Fergus gas processing terminal. Bacton gas terminal flows have also fallen substantially.
ConocoPhillips' Southern Area Facilities gas fields are currently undergoing maintenance, which has reduced receipts of gas to the Theddlethorpe terminal by around 10 mcm.
Added further to the tightness, exports through the InterconnectorUK pipeline to Belgium are higher at 25 mcm, compared to 11 mcm over the weekend.
UKRAINE
Gas prices further out on the curve were also higher, with the contract for the winter season of 2014-15 up 1.46 percent at 61.00 pence per therm.
This was mainly due to concerns about the delivery of Russian gas via Ukraine to Europe, as some countries, such as Slovakia, were received less gas than usual on Monday morning and over the weekend.
"With storage quite full in Europe but quite low in Ukraine, Q4 is going to be very volatile depending on the weather patterns and the day-to-day events on the ground in Ukraine," analysts at consultancy Energy Aspects said in a research note.
They recommend buying Q1 2015 natural gas as prices would likely spike on a short interruption to supplies.
However, any prolonged cut-off over the winter would have an even stronger impact on prices as Europe would then have to compete for higher-priced liquefied natural gas to balance demand.
"While events in Ukraine could push up the future curve this winter, we believe it could be an opportunity to sell Summer 2016 gas," the analysts added.
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