September 18, 2017 / 9:44 AM / in a month

UK GAS-Tight supply widens spot gas premium over forwards

Sept 18 (Reuters) - British prompt gas prices rallied on Monday morning as sharp declines in Norwegian supply and higher demand left the transmission system heavily undersupplied. * British within-day gas rose 1.85 pence, or 4 percent, to 47.95 pence/therm by 0929 GMT. * The day-ahead gas price was up 1.05 pence at 47.65 p/therm. * Norwegian gas deliveries through the Langeled pipeline fell by 32 million cubic metres (mcm) per day to 30 mcm/day on Monday as Europe's second-biggest supplier rerouted more gas towards mainland Europe. * A planned maintenance shutdown at Britain's Easington receiving terminal on Tuesday is expected to halt Langeled piped flows entirely but the drop could be offset by higher deliveries via sister pipeline Vesterled, analysts said. * Vesterled flows were 5 mcm higher at 14 mcm/day, flow data showed. * Britain's gas network was undersupplied by 28.7 mcm/day, with demand at 213.9 mcm/day and supply estimated at 185.2 mcm/day, National Grid data shows. * Gas-for-power consumption rose by 5 mcm/day to 58 mcm/day. * Heating demand, however, is forecast to drop as milder weather sweeps in over the weekend and next week, pushing heating-related demand down to 76 mcm/day for the coming weekend, compared with 99 mcm/day on Monday. * Home heating accounts for 40 percent of Britain's gas use, meaning that temperature changes can have a big impact on demand. * Adding to supply shortages on Monday was low output from British gas storage sites and continued high exports to Belgium of 36 mcm/day via the Interconnector UK pipeline. * The October gas contract was up by 0.2 pence at 45.25 p/therm. * A combination of warmer weather and resuming Russian gas deliveries to Europe through the Nord Stream pipeline from Sept. 22 widened the spot gas premium to later-dated contracts, reflecting expectations of improving supply, traders said. * Brent crude futures were up 26 cents at $55.87 a barrel. * Day-ahead gas at the Dutch TTF hub dipped by 0.03 euros to 17.77 euros per megawatt-hour. * The benchmark Dec-17 EU carbon contract was down by 0.03 euros at 6.92 euros a tonne. * Thomson Reuters analyst view: here (Reporting by Oleg Vukmanovic; Editing by David Goodman)

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