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UK GAS-Prices rise as drop in temperatures boosts demand
December 28, 2016 / 9:53 AM / a year ago

UK GAS-Prices rise as drop in temperatures boosts demand

* Within-day gas up 1.23 pence at 48.78 p/therm

* Consumption seen higher

Dec 28 (Reuters) - British wholesale gas prices rose on Wednesday as temperatures turned colder, boosting demand for heating.

Gas for immediate delivery was up 1.23 pence at 48.78 pence per therm at 0907 GMT, while day-ahead gas rose by 1.10 pence to 49.00 p/therm.

Traders said a drop in temperature had increased demand.

The weather in Britain has turned colder since the weekend, with temperatures ranging between -3 and 10 degrees Celsius in Britain, according to the Met Office.

Weather forecasts for January point towards slightly colder temperatures and consumption towards the end of the next 15 days will be higher, up to 260 mcm, said Dean Hunt, gas analyst at Thomson Reuters.

“Gas-for-power consumption is higher than previously forecast for the Christmas period, back up to levels between 50 and 65 that we saw before the holidays,” he added.

Peak wind generation is forecast to rise to 4.6 gigawatts (GW) on Thursday, however, from 3.3 GW on Wednesday, which could dampen gas demand for power generation, Elexon data shows.

Despite higher prices, Britain’s gas system was 5 million cubic metres (mcm) long, with demand forecast at 304 mcm and flows at 309 mcm/day, according to National Grid data.

UK Continental Shelf supply is strong, as short outages over the Christmas period either ended early Wednesday morning or are due to end soon.

An unplanned outage at Centrica’s North Morecambe gas sub-terminal has cut production to 0 mcm and is scheduled to end later on Monday. Flows from Norway through the Langeled pipeline are at 74 mcm.

In Britain’s power market, the day-ahead baseload power price was up 11 percent at 5.21 pounds per megawatt hour.

In the European Union’s carbon market, the benchmark Dec-17 carbon contract was 0.08 euro lower at 6.26 euros a tonne.

In the Netherlands, the day-ahead gas price at the TTF hub was flat at 18.60 euros per megawatt hour. (Reporting by Nina Chestney)

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