Prices jump as flows through Norwegian pipeline drop

LONDON: European benchmark gas prices jumped on Friday morning due to a drop in supply from Norway through the Langeled pipeline.

* British wholesale gas for day-ahead delivery rose by 6 percent to 37.50 pence per therm at 0718 GMT, while the May contract was nearly 8 percent higher at 38.25 p/therm.

* The Dutch gas market also rose with the day-ahead  up 5 percent at 15.85 euros per megawatt hour (MWh) and the May contract 5 percent higher at 15.65 euros/MWh.

* Flows from Norway through the Langeled pipeline are at around 25 million cubic metres (mcm), nearly 40 mcm lower than the previous day but no reason has been cited by the operator, Equinor.

* "It is possible, or even probable, that Equinor has turned down Troll (field) volumes for commercial reasons. This may have visible to buyers of Troll gas over the past two days," said Refinitiv gas analysts.

* The analysts previously expected total Norwegian production to be 331 mcm/day for April but if it averages 300 mcm/day for the rest of the month it implies a commercial reduction of 900 mcm.

* "For today, the removal of 900 mcm of Troll gas over April is bullish. Over the course of the summer, it may not be sufficient to clear oversupply caused by liquefied natural gas (LNG)," they added.

* LNG supplies to northwest Europe have been strong over the past few months which has created oversupply and dragged gas prices down. There are currently six tankers either docked or expected in Britain this month.

* European storage levels ended the winter season at the end of March 24.7 billion cubic metres (bcm) higher year-on-year, according to consultancy Energy Aspects.

* "The market still has seven months to reduce the size of the surplus to a maximum of 10-12 bcm, which would leave EU storage full at the end of October," Energy Aspects said.

* "The longer it takes to get onto a trajectory that delivers that reduction, the more bearish it will be," it added.

* In the EU carbon market, benchmark Dec-19 prices are 0.14 euro higher at 24.58 euros a tonne.