LONDON: British day-ahead gas prices rose to their highest levels since April on Monday as a Norwegian production outage threatened to cut supplies to the UK at the same time as colder weather was expected to push up demand.
Gas prices for delivery on Tuesday were trading at 71.75 pence a therm at 0845 GMT on Monday, the highest level since April, when prices spiked as Britain almost ran out of gas reserves.
Monday's price rises were a result of gas production problems in Norway, which is Britain's main supplier.
The plant processing gas from Royal Dutch Shell's giant Ormen Lange field suffered an unexpected outage on Monday morning because of bad weather, its operator told the Nordic power bourse.
Ormen Lange feeds the 70-million-cubic-metre (mcm) Langeled pipeline, Britain's main gas import route.
Despite the outage, flows though Langeled were unaffected at 0845 GMT.
"It'll be interesting to see whether the Norwegians can keep gas flowing at capacity through Langeled. For the time being, the UK market is still well supplied, but if Langeled flows drop significantly, we're going to fall short," one UK-based gas trader said.
Britain's gas demand was expected to be 294 mcm on Monday, slightly above the seasonal norm, according to National Grid data, but with flows seen at 307.3 mcm, the system would still be amply supplied.
Traders said that prices were also being lifted on the back of a colder weather outlook.
In Britain's spot power market, prices for baseload (24 hours) delivery on Tuesday rose by over five pounds a megawatt-hour (MWh) to 57.25 pounds ($93.78) a MWh despite windier weather being expected to push wind output up from under 1,500 MWh per hour on Monday to over 6,000 a MWh an hour by Wednesday morning.
Meteorologists said that temperatures would gradually fall this week from a daily average of around 7 degrees Celsius on Monday towards freezing point by the end of the week. ($1 = 0.6105 British pounds)
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