3 Min Read
* Poor storage withdrawals support market, outlooks
* Fundamentals are bearish on oversupply, dipping demand
* Strong carbon and power prices help support gas
Dec 23 (Reuters) - British wholesale gas prices rose on Friday as ongoing capacity reductions facing the country's largest gas storage site prompted traders to re-introduce risk premiums into winter contracts, traders said.
The price of gas for Monday delivery rose a penny, or 2.12 percent, by 1043 GMT to 48.15 pence per therm, in spite of weak fundamentals as demand swings lower into the Christmas holiday .
Even gas for instant delivery notched gains of 0.45 pence to 47.45 pence per therm, shrugging off bearish factors such as an amply supplied network.
Britain's gas grid was oversupplied by 9.8 million cubic metres (mcm/day), with demand estimated at 262.2 mcm/day, according to National Grid data.
Britain's main storage site Rough under the North Sea only resumed limited operations earlier this month after it had been restricted last year due to potential problems with well integrity.
Its return reassured traders that Britain would be able to meet peak winter gas demand by drawing on its reserves.
"In recent weeks the UK market has been discounting price premiums day by day on the back of Rough storage returning to service, this has reduced spreads with continental markets and squeezed gas imports from the Netherlands," a gas trader from a major European utility said.
"But since Rough has started announcing new maintenances and capacity reductions after returning from outage, traders are re-assessing price risks for winter," he added.
Rough-operator Centrica has imposed fresh restrictions on how much gas can be withdrawn from the site due to new maintenance issues.
Gas for working days next week rose by 1.6 pence, or 3.46 percent, to 47.90 pence per therm.
"Expected withdrawals from storage have plummeted, with just 8 mcm of supply from medium range sites currently booked, though with weaker demand the system is still forecast to close the session 8 mcm long," according to Andrew Crabtree, pricing and risk analyst at Wingas UK.
During the week, a slump in sterling's value against the euro had also helped buoy gas prices - a weaker pound can boost demand for UK gas for continental buyers who deal in euros.
A bullish run for European carbon and electricity prices provided further lift to gas markets, traders said.
The benchmark Dec-17 carbon contract rose by 0.15 euro, or 2.46 percent, to 6.24 euros a tonne.
Carbon has risen over 20 percent this week, buoyed by a traditional pause in government auctions of permits over the holiday period, limiting supply.
Further along the curve, gas prices also rose, with the summer 17 contract up 0.05 pence at 44.35 pence per therm.
In the Netherlands, the day-ahead gas price at the TTF hub rose by 0.07 euro to 18.20 euros per megawatt-hour. (Reporting by Oleg Vukmanovic; Editing by Mark Potter)