February 21, 2011 / 11:38 AM / 8 years ago

UK gas rises on tight system, strong crude

 * UK gas market opens short
 * Qatargas, Shell send first train 7 LNG cargo to India
 * BritNed tests to transport 515 MW to UK off peak on Tue
 LONDON, Feb 21 (Reuters) - British gas prices rose across the board on Monday as higher demand tightened supply margins, while curve contracts traded up on North Sea oil prices reaching new highs following Libyan oil export concerns.
 Gas for day-ahead delivery traded at a six-day high of 53.75 pence ($87.18) per therm, up 1.40 pence from the previous session. Within-day gas prices traded in line with the spot at 53.70 pence, a 1.20 pence gain.
 "On the prompt the gas system is short and the weather isn't looking as warm, so all staying strong," one UK-based energy trader said.
 The British gas system was around 13 million cubic metres (mcm) short at 1050 GMT on Monday, National Grid data showed.
 Withdrawals from the large Rough storage site stopped at the start of the gas day, after supplying up to 35 mcm overnight.
 Gas demand remained below seasonal norms, but the difference between average and current consumption levels shrank to 4.5 percent from around 10 percent seen last week.
 March also firmed in line with the stronger prompt, but gains were less pronounced as steady liquefied natural gas (LNG) supply is expected to feed the market and weather forecasts remain bearish.
 The contract traded at 53.20 pence ($8.65 per mmBtu), up 0.95 pence from the previous close.
 Qatari state-owned gas producer Qatargas and partner Royal Dutch Shell (RDSa.L) sent the first LNG export from their newly commissioned train seven plant to India, Qatargas said on Sunday. [ID:nLDE71J08H]
 Winter 2011 traded at the highest level since the start of the year at 61.95 pence, up 1.35 from the previous session, while summer 2011 touched a 10-day high of 53.40 pence, more than one penny above Friday's level.
 "Oil is strong so everything further out is up: coal, gas, power," the trader said.
 Brent crude prices surged to a fresh 2-1/2-year high at over $104 per barrel on Monday as civil unrest in OPEC-member country Libya threatened oil transport in the region. [O/R]
 The leader of the Al-Zuwayya tribe in eastern Libya said oil exports to the West would be cut off unless authorities stopped violence against protesters.
 Higher oil prices imply higher gas costs for many major consumers in continental Europe, which may mean they buy more gas in Britain, driving up UK gas prices and power generation costs.  <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 For a graphic showing winter 2011 gas prices and front-month Brent prices click here
 link.reuters.com/pek28r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 British curve power prices also firmed in line with bullish crude prices.
 Winter 2011 power contracts gained nearly one pound over the previous session, trading at 51.70 pounds per megawatt-hour (MWh).
 Closer in contracts also rose, tracking firmer gas prices as costs for producing power with gas become higher for generators.
 Day-ahead power traded at 46.75 pounds per MWh, up 1.25 pounds from Friday's trading level.
 Three nuclear power reactors were off line on Monday, including the 550-MW Dungeness B22 unit which disconnected from the grid unexpectedly on Friday. [ID:nWLB4611] [POWER/GB]
 Testing on the new 1,000-MW subsea cable linking the Dutch and British power markets also continued, with around 515 MW expected to be sent to the UK from the Netherlands in off-peak hours on Tuesday.
 "We've not really seen any great reaction, but Block 6 (which corresponds to the testing period) day-ahead has come down off its highs of the morning," the trader said.
 (Reporting by Karolin Schaps, editing by Jane Baird)                             

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