UK gas falls as Theddlethorpe supply returns

LONDON: British prompt gas prices fell on Monday morning as supply from the Theddlethorpe terminal resumed over the weekend and gas demand edged lower within the session.

Gas exports from ConocoPhillips' Theddlethorpe gas terminal resumed on Saturday, the operator said, after an operational problem offshore cut gas flows unexpectedly on Friday, sending prompt prices higher.

Gas for Monday delivery fell 0.65 pence to 55.90 pence per therm at 0928 GMT and Tuesday gas traded down at 56.00 pence.

Demand for British gas was revised down at 0900 GMT by network operator National Grid, pegging it roughly in line with seasonal norms, compared with a 4 percent rise forecast earlier in the session.

These factors outweighed the fact the British system was undersupplied by around by around 7 million cubic metres per day (mcm/day) and news that PX's Teesside gas processing plant was undergoing maintenance this month, cutting gas flows.

The terminal can process around 23 mcm/day covering up to 6 percent of UK gas supply, according to the operator.

Near by gas prices also edged lower on Monday as two more liquefied natural gas (LNG) tankers are expected in Britain over the course of the next week, taking the total to five shipments.

Austrian EconGas delivered its first LNG cargo to the new Dutch LNG terminal in Rotterdam at the end of last week to coincide with the commercial opening of the facility.

"From now on we will be able to procure up to three billion cubic metres of natural gas per year for our customers via the Gate terminal," said EconGas Managing Director Robert Teml in a statement on Monday.

Meanwhile, the Wilgas LNG tanker, which loaded at Belgium's Zeebrugge terminal on Aug. 6, is on its way to deliver its cargo to Japan later this week, AIS Live ship tracking data showed, further underlining the attractiveness of sending LNG to high bidding Asian buyers.

British gas for October delivery fell 0.40 pence to 64.40 pence, while November gas shed 0.35 pence to 72.15 pence.

US recession fears drove down oil futures on Monday, weighing on UK gas contracts for forward delivery.

The benchmark winter 2011-12 contract fell to the lowest level in five sessions to 73.10 pence, further retreating from its record high reached last week on LNG supply concerns.

The contract's technical indicators showed a looming turn in sentiment as its moving average convergence-divergence (MACD) indicators started converging.

British power prices eased in line with weaker gas and the expected restart of EDF Energy's 460-megawatt (MW) Hunterston B-8 nuclear reactor.

Baseload day-ahead power fell over two pounds to 47.25 pounds per megawatt-hour (MWh).

EDF Energy stopped its two 630-MW Sizewell B nuclear reactors on Friday, but its Hunterston unit is planned to return to service on Tuesday.

Gas-fired power plants covered 45 percent of British electricity production on Monday, as producers' profit margins of burning gas for power production remained relatively high.

At the same time, wind power production forecasts for Tuesday were also strong, with forecasts exceeding 3,000 MW at peak times, National Grid data showed.

Copyright Reuters, 2011