LONDON: British prompt gas prices rose on Tuesday morning as Norway rerouted supplies away from Britain towards Germany, leaving the UK system undersupplied.
Gas prices for delivery within the day were at 66.15 pence per therm by 0815 GMT, 0.65 pence above Monday's close, and prices for delivery the next day rose 0.3 pence to 66.25 pence a therm.
Flows through the Langeled pipeline, the UK's main subsea gas import route, fell by 20 million cubic metres (mcm) per day. Shipments via the Europipe II pipeline to Germany gained 32 mcm after the completion of maintenance at the Dornum receiving terminal.
The gas was rerouted because Britain is a residual market for Norwegian supplies. That means the UK gets what is not needed in continental Europe, which receives its supplies in long-term contracts and therefore has priority.
The rerouting left Britain's gas market slightly undersupplied, lifting prices.
"We'll have to withdraw gas from storage today to balance the system, which is not welcome as we're still behind schedule in refilling our facilities ahead of the winter gas season which starts next month," a utility gas trader said.
Britain's gas demand was expected to be 143 mcm on Tuesday, according to National Grid. With supplies seen around 139 mcm, there would be a need to import or withdraw 4 mcm from storage.
The country's gas storage sites are filled to an average of 87.17 percent, according to Gas Infrastructure Europe, 9.43 percentage points below this time last year.
Utilities use the lower-demand summer months to refill their gas ahead of the high-demand winter heating season, which officially begins in October.
Britain will receive some additional overseas gas supplies from the liquefied natural gas (LNG) market as two tankers with a combined capacity of over 400,000 cubic metres are expected to arrive in the next six days.
Once extracted from the supercooled tankers, this is equivalent to 240 mcm, the equivalent of around 1.5 days' worth of current UK gas demand.
In Britain's power market, prices for baseload (24 hours) delivery the next day were trading at 49.75 pounds ($78.21) per megawatt-hour, up 1.8 pounds since Monday's close.
Traders said the higher prices resulted from reduced nuclear generation availability since the beginning of this week clashing with cool weather expectations.
EDF Energy's Dungeness B22 nuclear unit and Heysham 1-2 unit were taken offline over the weekend for unplanned outages.
Britain's MetOffice said temperatures would not exceed 15 degrees Celsius this week, and conditions would be unsettled.
Comments
Comments are closed for this article.