LONDON: British prompt gas prices rose on Tuesday morning as lower pipeline flows and an increase in exports to continental Europe left the country's gas system slightly short, possibly prompting withdrawals from medium range storage sites, analysts said.
Gas prices for delivery within the day were trading at 65.10 pence a therm at 0940 GMT on Monday, 1 pence higher than the close on Monday, while prices for delivery the next day were trading at 64.80 pence, up 0.40 pence.
The higher prices for within-day gas were a result of demand of 161.3 million cubic metres (mcm) outstripping supply by over 15 mcm, according to figures from National Grid.
The slight premium for within-day prices over the day-ahead was mainly the result of an expected increase in flows to the Theddlethorpe terminal after a planned outage, analysts at Reuters Point Carbon said.
But on the bullish side, exports from Norway to Britain might continue to fall if demand in continental Europe for gas rises and the spread over British gas prices widens, the analysts added.
"We expect BBL flows to remain volatile, driven by demand for Dutch gas in the Continent. We expect IUK exports to stay above 20 mcm/d going forward, supported by the latest ZEE-NBP spread of above 1 pence/therm," the Point Carbon analysts wrote.
Norwegian exports to Britain, Europe's most traded gas market, dropped by around 6 mcm to 47.67 mcm, according to figures from operator Gassco.
Further out on the price curve, prices for delivery next winter were firm, trading at 72.49 pence a therm, up 0.14 pence on Monday's close.
Forward prices were supported by stronger Brent crude oil prices, which rose towards $110 per barrel on Tuesday and hit a three-month high on the back of lower inventories, firm demand and concern turmoil in Egypt could disrupt supply.
Britain's gas storage sites are filled to an average level of 63.2 percent by late Monday, up almost 1 percent from Friday evening's figures, according to Gas Infrastructure Europe.
This compares with over 80 percent at this time last year. Meanwhile the amount of liquefied natural gas pumped into the system fell to 20 mcm from 24 mcm on Monday ahead of a delivery expected on Tuesday by the Mekaines tanker from Qatar.
Analysts also noted another tanker, the Al Ghuwairiya, had left Suez Canal and was heading for Northern Europe, and could deliver into Britain's South Hook terminal later this month.
Britain's day-ahead baseload power prices rose to 48.95 pounds a megawatt hour, up 0.45 pounds on Monday's close, as the Dungeness B22 reactor went offline in an unplanned outage.
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