LONDON: Wholesale natural gas prices in Britain rose on Tuesday morning as an undersupplied system pushed up prices in the prompt market and a stronger oil market lifted prices further out on the curve.
The day-ahead gas contract gained 0.7 pence per therm to 55.25 pence at 0800 GMT as imports from Norway dropped.
In the power market, power prices for baseload (24 hours) delivery on Wednesday traded at 41.75 pounds per megawatt-hour.
Gas flows to Britain were expected to be 178.6 million cubic metres (mcm) on Tuesday, almost 11 mcm below the forecast demand of 189.4 mcm, according to National Grid data.
The reduction in supplies was largely down to lower flows through the Langeled pipeline from Norway, which fell from 56.6 mcm on Monday afternoon to 38.1 mcm on Tuesday morning.
"The drop in imports from Norway to the UK this morning could add some pressure to spot prices (and) flexibility from LNG terminals is still limited due to the ongoing maintenance at Milford Haven," analysts at Point Carbon said, adding they expected day-ahead gas prices to range between 55.30 and 56 pence per therm.
The month-ahead delivery contract also rose slightly, trading up 0.65 pence a therm to 55 pence.
The UK's MetOffice said the weather outlook for the next 30 days was improving slightly but that conditions would likely remain changeable, with no expectation of a hot summer spell.
"Some rain is likely at times but overall, conditions are unlikely to be as bad as we've seen so far this summer. However, a lengthy spell of hot, sunny weather does look unlikely," the MetOffice said.
Further out on the curve, prices for delivery next winter also rose, with traders pointing to the bullish oil market as the main reason.
"Although the power and gas markets generally look weak, forward prices in the gas market are currently being pulled up by the bull run the oil market that has taken place since the beginning of the week," one gas trader said.
Brent crude held steady above $103 per barrel on Tuesday on hopes of more policy steps by central banks to stimulate global economic growth ahead of US Federal Reserve Chairman Ben Bernanke's testimony.
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