LONDON: British prompt gas prices rose on Monday morning as lower pipeline supplies from Norway left the system undersupplied, meaning more liquefied natural gas (LNG) will be used to balance the system, traders said.
Gas prices for within-day delivery were trading at 65.65 pence a therm at 1100 BST (1000 GMT) on Monday, up 0.35 pence from the close on Friday, and hit an intraday high of 66.10 as traders responded to an 11 mcm fall in flows of Norwegian gas to Britain.
That put within-day gas at an 0.8 pence premium to the May contract, but traders said prompt prices would likely trade higher without the extra supply that flowed from LNG terminals, with the Al Karaana vessel expected to dock at South Hook on Monday.
"We are likely to see decent flows from South Hook and storage nominations are up, which will help balance the system and make up for shortfalls in Norwegian flows," said a trader.
"The big question going forward is whether we see any more downside in North Sea supply." Gas for day-ahead delivery was priced 0.15 pence higher at 65.60 pence.
Exports to Britain fell by 11 mcm to 71 mcm, as flows through the Vesterled pipelined dropped to zero on Monday.
Norway's gas output could be reduced by 21 million cubic metres per day until May 6 due to problems at Heimdal riser platform, the country's gas system operator Gassco said on Monday.
Supplies from South Hook rose to 49 mcm on Monday from 40 mcm at the end of last week.
Britain's total gas demand is expected to be 241.9 million cubic metres (mcm) on Monday, around 1 percent above the seasonal norm, according to National Grid. Flows were forecast at 233.7 mcm, leaving the system around 8 mcm short.
Analysts said the day-ahead contract is expected to trade sideways as supply from the South Hook LNG terminal may remain relatively high as two cargoes, the Mekaines and Zarga, are expected to dock in Britain early next month.
Demand for gas is expected to remain fairly steady for the next few days, traders said, as temperatures range between 4 and 16 degrees Celsius during this week, compared with Monday's minimum temperature of 6 and maximum of 14 degrees.
In the power market, prices for baseload (24 hours) delivery the next day rose by 1.40 pounds per megawatt-hour (MWh) between Friday and Monday to 49.28 pounds per MWh.
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