UK gas firms as colder weather returns

Wed Jan 19, 2011 11:45am GMT

 * Wed gas demand 1.5 pct above normal
 * Rough storage levels rise
 LONDON, Jan 19 (Reuters) - British gas prices rose early on
Wednesday as colder weather returned and lifted demand levels,
but liquefied natural gas (LNG) supply flexibility and rising
long-range gas stocks eased concerns about further price hikes.
 Temperatures in Britain dropped on Wednesday, with weather
turning chilly and frost spreading, the Met Office said.
 The return of cold weather conditions prompted gas demand to
rise above seasonal averages, after at least one week of
below-normal consumption.
 National Grid forecast Wednesday gas demand to rise 1.5
percent above seasonal norms.
 Day-ahead gas prices rose 0.60 pence to 56.40 pence per
therm at 1100 GMT, while weekend prices traded at 56.05 pence,
up 0.55 pence from the previous session.
 "Some see the weather a bit colder and that's probably why
they buy; others see coal going slightly up, but it's all
trading in a very narrow range," one British gas trader said.
 Despite higher demand levels, the gas system was well
supplied, especially with strong input from LNG terminals at
nearly 100 million cubic metres, according to National Grid
 "At the moment, I think (LNG terminals) have a lot of
flexibility to do pretty much what they want, so I wouldn't
expect major changes in prices for some time," the trader said.
 Supply from Norway via the Langeled pipeline and from the
Netherlands also added nearly 100 mcm to the system.
 Gas prices for delivery in February traded higher in line
with the prompt, but gains were minor as supply and weather
forecasts gave a more bearish outlook.
 February traded at 56.00 pence ($8.96 per mmBtu), up 0.15
pence from the previous session. March added 0.35 pence to 55.75
 Britain's long-range storage levels continued rising on
Wednesday as suppliers did not need to tap resources because
demand was being met through other means.
 For a graph showing Britain's long-range gas storage levels
click here:
 British power prices moved higher in line with colder
weather, but also found support from other commodities, despite
healthy supply, traders said.
 "The power system is so comfortable with so much supply,
that the fundamentals are less significant. We always price at
the marginal fuel, hence we follow coal/gas moves closely until
we get some power specific inputs," one UK-based power trader
 Power for delivery on Thursday traded more than one pound
above the previous session at 48.75 pounds per megawatt-hour
 All but two nuclear reactors were connected to the grid on
Wednesday and latest National Grid plant availability data
showed EDF Energy's Heysham B-8 nuclear reactor would return to
service on Wednesday. [ID:nLDE70G1HG]
 (Reporting by Karolin Schaps; Editing by Alison Birrane)

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