LONDON: British prompt gas prices rose on Wednesday, reflecting a rise in demand due to cooler weather conditions and tighter supply margins as the main pipeline importing gas from the Netherlands started a 10-day maintenance outage.
Gas for Wednesday delivery rose 0.60 pence to 61.10 pence per therm, while the day-ahead contract changed hands at 61.00 pence, up 0.25 pence from Tuesday's closing level.
"Demand is up and the system is showing it's short for now," a UK gas trader at a utility said.
British gas demand rose around 11 percent day on day as a drop in temperatures of nearly 4 degrees Celcius below seasonal norms stimulated the need for gas in heating systems.
Overall, demand stayed well below levels normally seen at this time of the year as the need for gas in power plants remained low due to weak profits.
The gas market was also undersupplied on Wednesday morning, with the system around 17 million cubic metres per day (mcm/d) short, National Grid data showed.
The 30 mcm/d BBL pipeline, which connects the British and Dutch gas markets, shut down for maintenance on Wednesday that will last until Sept. 29, cutting flows to Britain.
Britain's liquefied natural gas (LNG) terminals were also flowing gas at low rates and no cargoes were currently scheduled to arrive at either of the three facilities.
Gains in the crude market, following Japan's decision to ease monetary policy by boosting its asset purchase programme, sent gas curve contracts higher.
Brent crude futures rose above $112 per barrel, leading the benchmark front-season gas contract around 0.05 pence higher at 65.05 pence.
In Britain's over-the-counter power market day-ahead prices also rose as wind power production was set to drop significantly, while higher gas prices made it more expensive to burn the fuel in power plants.
The day-ahead baseload contract traded at 44.55 pounds per megawatt-hour, up 0.95 pounds on the previous session.
Wind farms are expected to produce much less electricity on Thursday, with output forecast to fall to just a third of levels seen on Tuesday, National Grid data showed.
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