UK gas prompt firms as field shuts, exports surge

Mon Apr 11, 2011 11:20am GMT
 

LONDON, April 11 (Reuters) - British natural gas prices rose on Monday after a Norwegian gas field shut, driving inputs from liquefied natural gas (LNG) terminals up to near capacity, while curve prices eased with oil.

Norway's Visund field in the North Sea was shutdown over the weekend after a gas leak, with flows from Norway into England falling sharply on Monday morning, while high exports to continental Europe supported demand. [ID:nLDE73A069]

"That's what is impacting Norwegian flows. I guess that's mostly likely brought the Norwegians out into the spot market to cover their sales," one UK gas market analyst said.

Inputs into the grid from the South Hook, Isle of Grain and Dragon LNG terminals shot up to make up for the drop in supply, encouraged by a surge to 59.00 pence per therm by 0800 GMT for gas delivered on Monday, but spot prices eased later.

The gas analyst said the high flow rates of Britain's biggest LNG terminals might limit their ability to satisfy any further supply glitches in the North Sea.

With a long line of LNG tankers heading to Britain to keep up super-cooled gas flows, May gas contract prices fell slightly, down 0.10 pence to 61.30 pence ($10.03 per mmbtu), while prices for the third quarter fell nearly half a penny to 64.30 pence, according to one broker.

Brent crude oil traded above $127 per barrel on Monday, slightly higher than at the end of last week, which helped drive wholesale forward UK gas prices up early in the session.

But benchmark crude prices dipped below $125.50 by 1045 GMT, on hopes of a Libyan peace agreement and Saudi assurances it can pump more oil if needed, which dragged curve gas prices down with it. [ID:nL3E7FB0Z5]

Winter 2011/12 gas eased back to Friday's close of 73.50 pence by 1045 GMT, off opening highs of 74.40 pence, while Winter 2012/13 edged down 0.20 pence to 73.80.   Continued...

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