UK spot gas prices jump as Ormen Lange shuts down
LONDON, Feb 11 (Reuters) - British gas prices surged after one of the North Sea's biggest production platforms shut down on Friday, slashing supply to Europe's biggest market.
Norway's Ormen Lange field was shut down on Friday morning after a technical glitch, with operator Royal Dutch Shell (RDSa.L: Quote) unable to say when it might restart. [ID:nLDE71A0PX]
Flows of gas from the huge field through the Langeled pipeline dived from around 65 mcm/day at around 0910 GMT to around 53 mcm 30 minutes later, driving UK gas prices for immediate delivery up about 3 percent from Thursday's levels GB2NB to highs around 54 pence on Friday morning.
Low demand for heating in mild weather in Britain helped temper the rise in prices, traders said, with National Grid forecasting demand of just 291 million cubic metres (mcm) for Friday, 18 percent below seasonal norms.
Within day gas prices eased back from the Ormen Lange sparked jump to 53.75 pence by 1030 GMT, while contracts for Monday edged down to 53.60 pence. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of Langeled gas flows vs UK spot: link.reuters.com/xuc97r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Prices also rose on the forward market, with strong oil prices because of uncertainty about stability in Egypt after President Hosni Mubarak refused to step down on Thursday supporting gas prices on the far curve and a colder weather outlook supporting the prompt.
"Mubarak did not resign," said one gas trader. "It's looking colder next week."
Mild weather had weighed on UK gas prices all week until the Ormen Lange shutdown startled the market.
March contracts rose half a penny to 53.45 pence ($8.58 per mmbtu) by 1040 GMT, while Summer 2011 rose 0.65 pence to 53 pence and winter by a similar amount to 60.30 pence.
Curve prices also firmed in the over-the-counter (OTC) power market, because gas is a key fuel for the UK power generation sector, with March baseload up about 30 pence to 46.35 pounds per megawatt-hour (MWh) and April contracts up 20 pence at 46.20 pounds, according to one broker. Monday baseload power traded at 45.80-46.50 pounds. (Reporting by Daniel Fineren)
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