UK gas prompt surges on tight LNG

LONDON : British prompt gas prices surged on Monday as supplies from liquefied natural gas (LNG) terminals and Norw
22 Aug, 2011

The front-season began to edge higher despite losses on crude oil.

UK NBP day-ahead gas climbed 1.10 pence per therm at 55.35 pence supported by tightening supplies as demand drew closer in line with seasonal norms.

The gas market was about 18 million cubic metres/day (mcm/day) short at 0900 GMT, helped by cooling temperature forecasts through Friday and high export demand to mainland Europe.

The Britain-Belgium Interconnector exported about 44 mcm/day on Monday amid storage refill programs across Europe. Last week export demand was driven by Italian and German utilities rebuilding their storage inventories, traders said.

Under normal circumstances Italian utilities would replenish underground storage sites with imports of Libyan gas via the sub-sea Greenstream pipeline. Italian utility Eni stopped importing gas from Libya on February 22 due to widespread unrest shaking the country, idling the pipeline until the situation showed signs of improvement.

Rapid advances by rebel fighters into the heart of Tripoli has renewed hopes of an end of Muammar Gaddafi's four decades in power. Greenstream remains idle for the time being.

The rebel advance pulled crude oil almost $1.5 per barrel compared with Friday as investors anticipate a resumption in oil exports from the OPEC member.

UK forward gas contracts shrugged off the downward move on oil, especially on the front few seasons, and instead appeared to track prompt gains.

The winter 2011-12 contract jumped back above the important 70 pence-per-therm mark, trading 0.35 pence higher at 70.50 pence. It is trading between its 50 and 100 exponential daily moving average values of 70.39 pence and 69.64 pence, respectively.

In Britain's over-the-counter power market day-ahead baseload moved about 1.85 pounds per-megawatt-hour higher, while the winter contract gained 25 pence at 55.50 pounds.

GAS-Please click on the following for information about UK and Belgian prices, field maintenance and field start-ups.

Copyright Reuters, 2011

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