UK prompt gas prices jump as weather reshapes demand

Reuters

LONDON (Reuters) - British prompt gas prices rose on Wednesday on cooler temperatures while deliveries remained ample despite no supply from the Netherlands.

The price of gas for day-ahead delivery rose 1.75 pence to 67.40 pence per therm at 0950 GMT and gas for instant delivery climbed to 65.45 pence, up 1.35 pence.

"Prompt contracts have firmed this morning despite a long system as the market adds further risk premium to prompt and near curve contracts in preparation of the cold spell over the coming days," a trader said.

The month-ahead gas contract also strengthened this morning due to stronger oil prices while quarterly and seasonal contracts saw little trading activity, he added.

Gas for delivery in November was up 0.01 pence at 69.61 pence. Gas for summer delivery traded 0.21 pence higher at 63.80 pence.

The onset of cooler weather lifted demand expectations for the coming days, estimated to be 27 million cubic metres/day (mcm) higher on Thursday, analysts at Thomson Reuters Point Carbon said.

"Local area heating consumption is expected at 126 mcm tomorrow, up by almost 30 mcm compared with today's anticipated level," they said.

Gas deliveries from the Netherlands fell to zero from around 19 mcm earlier on a lack of nominations, Point Carbon said, while according to National Grid data supplies from Norway rose to 66 mcm from around 30 mcm on Tuesday.

British day-ahead baseload power prices rose 1.95 pounds to 49.95 pounds per megawatt hour.

(Reporting by Oleg Vukmanovic; editing by Jason Neely)

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