LONDON: British gas prices for immediate delivery edged back up on Friday from seven-month highs achieved earlier in the week as higher Norwegian flows and slightly milder temperature forecasts reduced strain on the network.
The within-day contract fell 0.40 pence to 69.30 pence per therm at 1030 GMT as improved flows from main supplier Norway reduced the call on expensive stored gas reserves. Prices hit seven-month highs of 70 pence earlier this week.
The market was oversupplied by approximately 1 million cubic metres (mcm)/day. Withdrawals from Britain's biggest gas storage facility, Rough, fell to 10 mcm from 30 mcm overnight, as Norway diverted around 17 mcm more gas to Britain from mainland Europe, bringing total deliveries via the Langeled pipeline to 70 mcm.
Steady send-out from the South Hook liquefied natural gas (LNG) terminal at 40 mcm helped make up for the sudden drop in storage withdrawals.
"Prompt and near curve prices have continued to soften this morning on the back of comfortable system dynamics and higher temperature forecasts," a UK gas trader said. Gas for Monday delivery was the only prompt contract to buck the downward trend, edging 0.30 pence higher to 69.90 pence.
Domestic gas output at 132 mcm was in line with Thursday levels.
An outage at Norway's key gas processing platform Troll indicates that Europe's biggest gas supplier after Russia is producing gas at or near its maximum capacity, analysts at Thomson Reuters Point Carbon said.
"This implies that the Norwegian flows to the UK are now highly dependent on the nominations from the continent for Norwegian gas and there is a risk for lower Langeled flows if the continent will nominate more gas from Norway," they said.
Earlier this week Norwegian gas exports rose to their maximum capacity this winter, with flows to Britain reaching almost 120 mcm. Power prices for baseload (24 hours) delivery on Monday were trading at 56.40 pounds per megawatt-hour (MWh) on Friday, up 40 pence a MWh.
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