LONDON: Prompt natural gas prices in Britain rallied on Tuesday on an undersupplied system and cuts to Dutch output which prompted concerns over future pipeline supplies.
Gas prices for day-ahead delivery were up 5.1 percent at 51.50 pence per therm at 0953 GMT.
National Grid data showed the system was around 15 million cubic metres (mcm) short, with supply flows at around 310 mcm and demand forecast at around 325 mcm.
The Netherlands imposed a new cap on production from its giant Groningen gasfield to 16.5 billion cubic metres (bcm) in the first half of the year on Monday after continuing public concern over earth tremors in the area.
The new cap on production implies an annual production cap of around 33 bcm, down from a previous cap for 2015 that was set at 39.5 bcm.
"It's not surprising to see prices rise given the production cut at Groningen," said Wayne Bryan, analyst at consultancy Alfa Energy.
"This cut could spell bad news for UK flows via the BBL pipeline."
Prices for summer delivery were up 4.3 percent at 48.05 pence per therm.
Thomson Reuters Point Carbon analysts said that future BBL flows were expected to stabilise at around 30 mcm/d.
Meteorologists forecast Britain's temperatures rising above seasonal norms from Thursday, which should temper demand for fuel for heating.
In the Netherlands, the day-ahead gas price at the TTF hub was up 3.9 percent at 22.70 euros per megawatt-hour.
The benchmark European Union carbon price eased 0.4 percent to 6.96 euros per tonne on ICE Futures Europe.
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