January 20, 2011 / 12:11 PM / 8 years ago

UK gas rises as Norway gas plant shuts

* Kollsnes processing plant shut

* Thursday gas demand almost 7 pct above seasonal norm

LONDON, Jan 20 (Reuters) - Prompt British gas prices rose for the fourth day in a row on Thursday after a Norwegian gas export plant shut unexpectedly and UK gas demand rose well above seasonal norms in cold weather.

The Kollsnes gas processing plant in Norway, which sends heating fuel to Britain through the Langeled gas pipeline, shut on Thursday due to a power supply problem. [ID:nLDE70J0YC]

The price of gas for delivery on Thursday rose from 56.50 pence per therm before the power problem warning to an intra-day high of 58.00 pence after the processing plant shutdown news.

But the price reaction was fairly subdued, despite high British demand in cold weather, and within-day gas prices eased to 56.75 pence by 1140 GMT, while prices for Friday lingered around 57 pence, up a penny from the opening level.

“Prices bounced on the prompt, but on the within-day, I guess the relatively long system tempers any reaction,” said one gas trader with a utility.

There was still no drop in flows into Britain through Norway’s Langeled gas pipeline by 1140 GMT, but any drop in output from Kollsnes would not be felt on the east coast of England until later on Thursday because of the time it takes the gas to get across the North Sea.

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Graphic on UK supply vs within day gas price:

link.reuters.com/kub47r

Graph showing Britain's long-range gas storage levels: here

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February contract prices rose half a penny to 56.30 pence ($9.00 per mmbtu), while March gained about a third of a penny to 56.00 pence as the prospect that Britain’s gas stocks will be needed to compensate for lower flows from Norway supported prices for the end of winter.

National Grid forecast Thursday gas demand at almost 7 percent above seasonal norms, and Britain’s biggest gas storage site was used throughout the morning on Thursday to top up supply from LNG terminals and North Sea fields.

British power prices also rose, in line with stronger gas prices, with February baseload supply contracts up 15 pence at 49.30 pounds per megawatt-hour (MWh) and March baseload up 30 pence at 49 pounds.

UK power exchange N2EX said it would launch its electricity futures trading platform on Jan. 31, a year after starting spot trade. [ID:nLDE70J0H9]

Reporting by Daniel Fineren and Karolin Schaps, editing by Jane Baird

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