LONDON: British prompt gas prices rose on Tuesday as a halt in flows from Belgium via the Interconnector pipeline tightened an already undersupplied domestic market, despite mild weather forecasts.
A market undersupplied by 11 million cubic metres (mcm) of gas propelled the price of gas for immediate delivery up 0.55 pence to 70.10 pence per therm at 1040 GMT.
Flows through the UK Interconector gas pipeline dropped to zero at just after 1000 GMT from around 13 mcm prior to the cutoff.
Lower send-out from the South Hook liquefied natural gas (LNG) terminal in Wales helped to 32 mcm from 40 mcm overnight helped put more pressure on supplies.
Flows from Norway via the Vesterled pipeline rose to 18 mcm and flows through Langeled steadied at 71 mcm.
Withdrawals from Britain's biggest gas storage site, Rough, were climbing back towards Monday levels although they still lagged. Rough pumped out about 30 mcm at 1100 GMT compared with 36 mcm in the previous session.
"Temperatures are forecast to increase by 5 degrees Celsius from tomorrow and stay above seasonal norms until the weekend," analysts at Thomson Reuters Point Carbon said.
The temperature rise is estimated to reduce heating demand by 30 mcm, one trade source said.
Gas for Wednesday delivery fell 0.05 pence to 69.80 pence, while most other prompt and near-curve contracts firmed slightly.
"Interconnector UK imports have decreased this morning following the reduction in (UK gas benchmark) NBP's premium over mainland Europe during yesterday's session," a UK gas trader said.
The operator of the pipeline was not immediately available to comment on the cause of the halt in flows.
A narrowing spread between UK and mainland European gas prices means utilities on the continent are discouraged from selling gas into Britain due to reduced profit margins.
"This in turn has led to a drop in BBL flows whilst LNG send outs are slightly lower day on day," the trader said.
British gas demand was pegged at 318.3 mcm on Tuesday, around 37 mcm above seasonal norms as cold weather boosted demand for gas in heating systems.
Across the curve, gas prices rose due to the bullish impact from te crude oil market where investors judged that the historic deal between Iran and world power would bring no immediate increase in oil supplies.
Brent crude edged above $111 a barrel on Tuesday.
This led front-season gas prices in the British market 0.15 pence higher at 64.65 pence per therm.
In Britain's over-the-counter power market prompt prices rose in line with firmer gas prices, reflecting higher demand amid cold weather conditions.
The day-ahead baseload power price gained 45 pence to 57.20 pounds per megawatt-hour.
EDF Energy boosted power availability after resuming output from its Heysham 2-8 nuclear reactor on Tuesday.
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