February 1, 2012 / 11:27 AM / 6 years ago

UK gas prices ease on healthy supply, despite cold

* Spot gas prices move slightly down on high supply

* Sub-zero temperatures expected until weekend

London, Feb 1(Reuters) - British spot gas and power prices dropped slightly despite the cold on Wednesday morning as healthy supplies countered higher heating demand.

A Siberian cold front which has much of western Europe in its grip meant that gas demand in the UK was expected to rise to 381.5 million cubic metres (mcm) on Wednesday, about 15 percent (or 49.5 mcm) above the seasonal norm, National Grid data showed.

But expected gas flows were even higher at 407.4 mcm, driving prices slightly down from Tuesday and implying that some gas could be injected into storage.

UK gas storage levels were filled to 74.24 percent on Tuesday, compared with a European average of 66.01 percent, data from Gas Infrastructure Europe showed.

Analysts at Point Carbon said they expected spot gas prices to move sideways as high withdrawals from storage were expected to balance higher forecasted consumption on Wednesday.

Gas for next day delivery was trading around 61.35 pence per therm at 1040 GMT, slightly down from Tuesday’s 61.50 pence, and within-day gas was trading around 59.90, down more than one pence from Tuesday.

The price rises in the past days meant that spot gas prices have now reached levels common during the winter heating season, but they still remain lower than during peak levels in late 2010 and early 2011.

The UK is also expected to receive a tanker of liquefied natural gas on Feb. 17 from Qatar, according to AIS Live data on Reuters.

EDF Energy, Britain’s biggest nuclear power producer, took its 480-megawatt nuclear reactor at Hinkley Point B-7 offline on Wednesday for planned maintenance, and a spokeswoman declined to give a restart date for the reactor.

Baseload (24 hours delivery) power prices for Wednesday moved up in line with gas to 46.75 pounds per megawatt-hour (MWh), maintaining Tuesday’s price rise, but remain at relatively low levels compared with the last winter season.

Further out on the curve, prices were firm, with the NBP’s summer 2012 gas contract trading around 55.85 pence per therm, slightly above its 50 exponential daily moving average value of 55.70.

WEATHER

Weather forecasters said that sub-zero temperatures were likely to prevail until the end of the week.

The Met Office kept its Level 3 Weather Alert in place, which gave “a 100 percent probability of severe cold weather between 1000 on Monday and 1000 on Friday in parts of England” and that “milder conditions are likely to arrive during Saturday and Saturday night, with temperatures likely to rise above threshold values in all regions.”

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