LONDON: British prompt natural gas prices rose on Wednesday morning as an undersupplied system pushed up prices while contracts for later delivery remained firm on the back of oil prices hovering around the $100 a barrel marker.
Gas prices for within-day delivery were trading around 57.85 pence a therm at 0930 BST (0830 GMT) on Wednesday, up 1.05 pence since Tuesday morning.
The price rise was a result of an undersupplied system and supply concerns as a result of an offshore oil and gas strike in Norway.
UK gas demand was expected to be 190.6 million cubic metres (mcm) on Wednesday, some 15.5 mcm above supplies, according to National Grid data.
"The UK system opened significantly short also this morning on higher IUK exports (to continental Europe)," analysts at Point Carbon said, adding that "the Norwegian processing plant Kollsnes will go into partial maintenance tomorrow and possibly reduce Norwegian imports to the UK, providing a bullish signal for day-ahead."
Despite this, Point Carbon said that it expected gas prices to move sideways around 57.60 pence a therm rather than rise further.
"Gas prices in Britain have been moving sideways a lot in bullish price scenarios because demand is so low," one gas trader said.
National Grid said that Wednesday's gas demand would be more than 20 percent the seasonal norm of 245.4 mcm.
The UK's MetOffice said that it expected current wet and mild weather to continue in the coming days, with "slow moving heavy and thundery showers on Friday" and further rain on Saturday and Sunday, with temperatures highs above 20 degrees Celsius.
Further out on the curve, oil movements remained the key factor in the gas market.
Following a drop to below $90 a barrel in June, front-month Brent crude prices have risen back to levels around $100 a barrel early this month.
British gas prices for delivery next winter were trading at 65.75 pence a therm, up half a pence since Tuesday morning.
The recent rises mean that the contract's price is now only slightly below its 50 exponential daily moving average (DMA) value of 66.25 pence.
The product has been trading below its 50, 100 and 200 DMA values since April, and while traders said that the 50 DMA will provide a strong resistance marker, a rise above there could trigger a more sustained upward move.
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