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UK prompt gas down on milder weather
January 25, 2013 / 12:21 PM / 5 years ago

UK prompt gas down on milder weather

* Temps. to align with seasonal norms next week

* Traders shrug off extended Norwegian outage

* Curve supported by stronger oil

LONDON, Jan 25 (Reuters) - British prompt gas prices fell on Friday due to lower demand, milder weather forecasts and a comfortably supplied transmission network, traders said.

Gas for Monday delivery fell 1.4 pence to 65.50 pence per therm at 1200 GMT, reflecting reductions in demand caused by forecasts of milder weather next week.

“Demand has been disappointing (lower-than-expected) during the recent cold snaps and the weather looks like it’s getting a little milder from now on,” a British gas trader said.

Britain’s gas system was over supplied by around 6 million cubic metres per day (mcm) on Thursday, while gas demand was a fifth above seasonal norms, National Grid data showed.

But temperatures were forecast to rise and reach average levels within the coming week, Britain’s Met Office said, meaning that gas demand for heating is expected to fall.

Traders ignored an extended outage affecting production from Norway’s Troll A gas processing facility until Feb. 4, largely because flows to Britain were steady through the main Langeled pipeline.

“So far Langeled flows seem unaffected, but the Vesterled flows are lower,” Thomson Reuters Point Carbon analysts said.

Flows through the Vesterled pipeline dropped to 25 mcm from around 40 mcm on Thursday, flow data shows.

“We expect volatile Vesterled volumes as long as the compressor problem at Troll A continues,” Point Carbon said.

The drop in Vesterled flows was partially offset by an expected return to full production of the North Sea’s Britannia gas field on Friday, according to ConocoPhillips, which operates the field with Chevron.

Output from the UK Continental Shelf dropped to 130 mcm from 139 mcm in the previous session.

The possible restart of Total’s Elgin gas field in the North Sea within days or weeks added to downward price pressures.

Elgin shut down in March last year following a leak and had been expected to restart before the end of 2012.

Further out, prices were supported close to Thursday’s closing levels, helped by strong crude oil.

Brent crude prices climbed towards $114 per barrel on Friday following robust economic data from the United States, China and Germany pointing to a possible uptick in oil demand.

Britain’s benchmark front-season gas contract traded down 0.05 pence at 62.35 pence, while winter 2013 gas traded at 70.25 pence, 0.05 pence higher day on day.

In Britain’s over-the-counter (OTC) power market, declined to 47 pounds per megawatt hour, a day-on-day loss of nearly 5 pounds.

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