UK gas price signals limited Norwegian strike impact
* 5-10 pct chance of total Norwegian shutdown-trader
* Price signals show Norway fear a short-term concern
LONDON, July 6 (Reuters) - British prompt gas prices extended gains on Friday morning after Norway's energy industry threatened the previous day to shut down all production as part of an escalating two-week dispute with its offshore workers.
Forward prices softened in line with crude oil markets.
"There is a five to 10 percent chance of a complete shutdown in Norwegian production, that is fuelling gains on the prompt," a trader with a major UK utility said.
But slight gains on the August gas contract suggested that the concerns over Norwegian supply disruptions were confined to the short-term, the trader added.
Gas for next-week delivery, which is when the production halt is expected to take effect, rose to levels not seen since early May at 59 pence a therm.
August gas prices were steady by comparison, despite a potential 40 percent cut in the UK's supplies of gas, underscoring the short-term nature of the threat, the trader said. If traders expected the disruption to have longer term impact then month-ahead contracts would have rallied in line with the prompt market.
Norway's energy industry plans to prevent offshore workers from operating oil and gas production platforms from midnight on Monday as tense talks with union bosses over pension entitlements reached deadlock.
Locking-out workers would mean a complete shutdown of oil and gas production in Norway, Europe's second-biggest gas supplier behind Russia, but analysts expected the government to intervene to end the strike to prevent a full closure.
Britain imported similar amounts of gas to Thursday. Liquefied natural gas (LNG) terminal South Hook pumped out 20 million cubic meters/day, while the other three ran idle.
The benchmark winter 2012 gas contract fell slightly to 65.9 pence on the back of weaker crude oil markets.
UK gas demand was expected to be 182 million cubic meters/day (mcm/day) on Friday, some 6 mcm/day below supplies, according to National Grid data.
The UK's MetOffice said it expected current wet and mild weather to continue in the coming days, with "slow moving heavy and thundery showers on Friday" and further rain on Saturday and Sunday, with temperatures high above 20 degrees Celsius.
In the power market, the day-ahead baseload contract traded slightly lower at 42.70 pounds per megawatt hour.
Trading liquidity in the forward power market remains thin.
"The spark spreads have been well bid in the back but the trouble is there are only a few active players with little inclination to sell currently," trading brokerage Marex Spectron said in a note. (Reporting by Oleg Vukmanovic; editing by James Jukwey)
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