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UK GAS: Tight system supports prompt, seasons gain with oil

Increase font size  Decrease font size Date:2012-06-21   Views:532
Prompt prices were supported Monday morning on the UK NBP gas trading hub as the system operated short of supply, while seasonal contracts pushed to higher values as oil prices strengthened.

The within-day contract was trading at 55.55 pence/therm at midday BST (1100 GMT) Monday, having gained 0.75 p/th from Friday's close.

The day-ahead contract was 0.45 p/th higher at 55.65 p/th.

The national gas system operated short throughout the morning with a drop in flows from Norway on the Langeled pipeline as well as an outage at the Centrica-run South Morecambe gas field.

Langeled gas flows fell from around 45 million cubic meters/day overnight to 35 million cu m/d at noon, National Grid showed.

The South Morecambe gas field, with a production capacity of 5.35 million cu m/d, went offline at 10:34 BST due to a technical process issue, operator Centrica announced. No time frame was given for its restart.

The system opened short by 11 million cu m and at noon remained short by 5 million cu m with National Grid forecasting the day's demand at 219.3 million cu m.

A market source said the system should be balanced throughout the afternoon due to rising output from the South Hook LNG terminal.

"The system should be fairly comfortable. There's a penny difference for today and tomorrow's gas against next week so South Hook is ramping up," the source said.

South Hook was operating at a rate of around 30 million cu m/d over night and at midday hit 47.60 million cu m/d.

The working days next week contract was trading at 54.00 p/th at midday.

The market source also said prices should be fairly-well capped in the lead-up to Wednesday's closure for maintenance of the UK-Belgium Interconnector pipeline.

"Nothing much is going to happen in the lead-up to IUK," the source said. "People will be waiting to see what happens. If it's the lowest demand period of the year and IUK is off and there's not enough gas -- what does that mean for the Winter?"

"On the flip-side to that, if the system is loose [of supply], it'll make for a bearish argument," he said.

The IUK pipeline has been exporting a daily average for June of 23.7 million cu m and is scheduled to return to operations at June 28.

Both the front month and quarter contracts were unchanged at 54.70 p/th and 55.80 p/th, respectively.

Meanwhile, seasonal contracts posted gains, buoyed by rising oil prices.

"Winter 12 has opened higher as oil rebounds over $100/b due to the agreed Spanish bank bail-out over the week," a market analyst said.

At 1100 GMT, July ICE Brent traded 88 cents higher at $100.35/barrel.

Winter 12 was trading 0.30 p/th higher at 65.60 p/th.

Summer 13 was 0.25 p/th higher at 58.00 p/th and Winter 13 was just 0.05 p/th up at 66.70 p/th.

 
 
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