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Markets

UK spot gas prices gain on supply shortfalls

Published Updated

 

Gas for Tuesday delivery rose 0.75 pence to 67.50 pence per therm largely because of a supply shortfall of 36 million cubic metres (mcm), although traders expected the system to balance later in the session.

 

UK Continental Shelf output rose to 136 mcm from 127 mcm on Monday while total imports from Norway, Belgium and the Netherlands jumped to 184 mcm, up from 164 mcm previously.

 

Norwegian state-led energy firm Statoil said on Monday its gas output was to be reduced by 37 mcm per day until Jan. 24 due to compressor problems at the Troll A gas platform.

 

Despite that forecast drop, Norway boosted exports to Britain by 20.5 mcm to 113.5 mcm and flows through the 72 mcm Langeled pipeline hit full capacity.

 

Troll A has production capacity of 110 mcm/day.

 

Day-ahead gas traded at 67.60 pence, down 0.05 pence on Monday's closing price.

 

"We can still expect cold weather this week and that's likely to keep demand high," one trader from a utility said.

 

Temperatures this week are forecast to hover above freezing during the days but are expected to drop as low as minus 4 degrees Celsius on Thursday night.

 

Further out, curve contracts made slight gains as Brent crude oil steadied below $112 per barrels.

 

Benchmark front-season gas rose 0.05 pence to 62.05 pence, while winter 2013 gas gained 0.15 pence at 70.40 pence.

 

Britain's over-the-counter electricity market also traded up on Tuesday, tracking gains in the gas market.

 

Day-ahead baseload power rose around 60 pence from Monday's levels to 53.55 pounds per megawatt-hour.

 

Copyright Reuters, 2013
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