January 24, 2011 / 11:44 AM / 7 years ago

UK gas prices off early highs as Norway supply rises

LONDON, Jan 24 (Reuters) - British gas contract prices began Monday firmer than Friday’s close, after very erratic supplies of Norwegian gas over the weekend, but eased later as Norway’s biggest gas export facility increased output.

Data from National Grid showed big swings in Norwegian gas supplies to Britain over the weekend, but flows of fuel through the Langeled pipeline from Kollsnes into eastern England had bounced back to 60 mcm/day early on Monday. Norwegian North Sea gas infrastructure operator Gassco said on Monday it expected Kollsnes, which can export up to 143 million cubic metres of gas a day, to return to full capacity on Monday after the plant shut last Thursday, helping ease concerns about supplies. “The market was a bit bullish early in the morning but then we have retraced,” said one trader, adding that below average demand because of mild weather for the time of year should take the strain off Britain’s gas storage sites and weigh on prices.

Gas for delivery on Tuesday opened around 56.50 pence per therm but fell to 56.15 pence after Gassco said Norwegian export capacity should be back to normal on Monday.

Contracts for February hit 56.10 pence, up more than a penny from Friday, before easing to 55.45 pence ($8.84 per mmbtu).

Unlike early 2010, when temperatures in Britain were generally below seasonal norms, the very cold start to winter in December and early January has been followed by a fairly mild second half of January which has allowed some topping up of storage levels.

Stocks of liquefied natural gas (LNG) at UK import terminals also hit record high in mid-January, but LNG stocks fell by more than 20 percent over the weekend, according to data from National Grid, as LNG terminals pumped more into the network to make up for lower Norwegian pipeline supplies.

Another LNG tanker arrived at the Isle of Grain terminal near London from the United States over the weekend, with at least three more expected to deliver to Britain before the end of the month. [LNG/TKUK]

Prices in Britain’s power market were stable, with baseload power for delivery on Tuesday trading at 48.20-48.50 pounds per megawatt-hour (MWh), compared to 48.60 pounds paid for Monday baseload power at the end of last week.

Prices for February and March were slightly softer, at 48.60 pounds and 48.30 pounds, according to one broker.

Reporting by Daniel Fineren; Editing by Jason Neely

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