LONDON: British prompt gas prices rose on Monday following a drop in imports from Norway, but demand remained well below seasonal norms due to ongoing maintenance on the main pipeline for exporting gas to continental Europe.
Gas for within-day delivery rose 1.40 pence to 55.40 pence per therm, a five-day high, as the gas market was undersupplied, while day-ahead gas added 0.10 pence to 54.60 pence.
"It is just the short system with the lower Norwegian flows," one UK gas trader said, explaining gains in the prompt market.
Flows on the UK-Norway Langeled pipeline nearly halved overnight to around 25 million cubic metres per day (mcm/d), National Grid data showed.
The drop in imports could be related to reduced output from Norway's Aasgard gas field, which feeds the country's Kaarstoe gas processing plant which sends some of its gas to Britain.
Production at Aasgard dropped by 24 mcm/d on Monday following a shutdown at midnight, which could last 24 hours, Norway's gas system operator Gassco said.
Gas demand was one quarter below levels usually seen at this time of the year as ongoing maintenance on the IUK pipeline sending gas to Belgium continued to weigh on export demand.
Further out, the planned restarting of two Japanese nuclear reactors for the first time since the Fukushima accident provided some relief to the outlook for liquefied natural gas (LNG) deliveries to Britain.
LNG demand in Japan, which was already the world's top LNG importer, skyrocketed after Fukushima as mainly gas plants provided the electricity to make up for production lost as nuclear plants shut down as a precaution following the accident.
"That's it, nukes will restart in Japan, but two (restarts) have very limited impact. Maybe it just gets them through their peak demand," another UK gas trader said.
Gas for delivery this winter, Britain's peak demand season which is dependent on LNG imports, dropped 0.15 pence to 65.00 pence per therm.
Power prices in Britain also firmed on the prompt as low wind power output is set to tighten the system on Tuesday, while higher gas prices made it more expensive to burn the fuel in power stations.
Power for day-ahead baseload delivery rose 45 pence to 42.35 pounds per megawatt-hour (MWh).
Wind farms are expected produce little power on Tuesday, with National Grid forecasts showing output below 500 MW for most of the day.
But the restart of EDF Energy's Dungeness B21 550-MW nuclear unit help cap gains on power prices.
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