Wednesday, 4 July 2012

UK gas prices rise on undersupplied system

British prompt natural gas prices rose on Wednesday morning as an undersupplied system pushed up prices while contracts for later delivery remained firm on the back of oil prices hovering around the $100 a barrel marker.

Gas prices for within-day delivery were trading around 57.85 pence a therm at 0930 BST (0830 GMT) on Wednesday, up 1.05 pence since Tuesday morning.

The price rise was a result of an undersupplied system and supply concerns as a result of an offshore oil and gas strike in Norway.

UK gas demand was expected to be 190.6 million cubic metres (mcm) on Wednesday, some 15.5 mcm above supplies, according to National Grid data.

"The UK system opened significantly short also this morning on higher IUK exports (to continental Europe)," analysts at Point Carbon said, adding that "the Norwegian processing plant Kollsnes will go into partial maintenance tomorrow and possibly reduce Norwegian imports to the UK, providing a bullish signal for day-ahead."

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