LONDON, Jan 6 (Reuters) - British gas prices turned down early on Wednesday, putting an end to a strong rally early this week, as supply rose, including input from Norway, to more than offset strong heating demand.
Gas for Thursday stood at 43.10 pence per therm ($6.88 per mmbtu) by 1000 GMT, down 3.4 pence from day ahead contracts late on Tuesday. February shed 0.65 pence to 36.85 pence and March was down 1.05 pence at 36.20 pence. “There’s plenty of supply,” said a trader. “It’s cold weather, but the system is long. People are confident the system can cope. It is the coldest day so far (this winter) and the weather can get milder from where we are now.” Data from the National Grid showed the system was long early on Wednesday, with Norwegian supply via the Langeled pipeline back up at around 70 million cubic metres per day and more input from continental Europe via Interconnector and BBL pipelines.
The Rough storage facilities were also running at full capacity, adding more than 40 million cubic metres.
Asked about the rapid withdrawal of gas from storage facilities over the past several days, a spokesman from Centrica said they were about 70 percent full, which was higher than this time last year.
Sam Laidlaw, chief executive of Centrica, said: “While we are...watching the situation closely, the evidence is that the UK gas market is currently operating well in the face of severe weather and unprecedented demand.
“In the last few years over 10 billion (pounds) has been invested to create UK import capacity that now exceeds our own North Sea peak production. We now have more diverse and resilient infrastructure to manage supply and demand.”
Earlier this week, prompt gas prices climbed to highs not seen since February last year as the cold spell was expected to last until late in January, while input from Norway had dropped, following a gas leak at Troll field. [ID:nLDE60310S]
No comment was immediately available from Dragon LNG terminal, from which supply was low at around 3 million cubic metres. Yet data from Reuters showed no LNG tanker has arrived at the terminal since December 9. The National Grid put Wednesday demand for gas at 448 million cubic metres, down slightly from 449 million —- or the highest level ever — projected for Tuesday.
Along the curve, prices were also soft. The 2010 second quarter was down 0.70 pence at 33.20 pence and the 2010 summer slipped 0.70 pence to 33.30 pence. In the power market, prices were soft in line with gas prices.
Baseload electricity for Thursday stood at 43.50 pounds per megawatt hour, compared with 44.50 pounds for day ahead contracts late on Tuesday. February was 38.35 pounds, against 39 pounds, and March at 37.85 pounds, against 38.30 pounds.
Reporting by Nao Nakanishi; additional reporting by Kwok W. Wan; Editing by Keiron Henderson