April 5, 2013 / 10:11 AM / 6 years ago

UK gas prices jump as cold bites into storage

* Stored reserves drop below 5 pct of capacity

* Forecasters expect warmer weather from mid-April

* Outages loom over weekend and next week

LONDON, April 5 (Reuters) - British weekend gas prices rose on Friday after stored gas reserves plummeted this week as looming production outages are expected to squeeze supplies and the country heads into more abnormally cold weather.

The price of gas for weekend delivery rose 3.50 pence to 81.00 pence per therm on concerns over depleted storage sites.

“If we hear of any other maintenance outages or slightly revised cold weather forecasts, then people get very nervous, very quickly. Prices could jump by a lot,” a UK gas trader said.

“Once we establish a buffer in the stored reserves, then we should start to see prices come off,” he added.

Withdrawals from Britain’s gas storage sites accelerated this week, pushing reserves below 5 percent of capacity.

Gas for immediate delivery rose 0.75 pence to 83.50 pence, while the day-ahead contract for Monday increased 0.5 pence to 82.50 pence, price data showed.

Britain’s gas market was undersupplied by 1.5 million cubic metres/day (mcm), while demand at 305 mcm was about 15 percent above the seasonal average.

Prices are expected to fall next week as warmer weather begins to move in from Thursday.

Unseasonably cold weather, which has gripped Britain since the beginning of March, has contributed to depleting the UK’s gas storage sites by 95.06 percent to just 235 mcm, according to data from Gas Infrastructure Europe.

That leaves the market with reserves of little more than half a day’s worth of gas consumption in case of a major supply outage.

The UK’s Teesside processing terminal is expected to undergo maintenance from Saturday, reducing supplies to the UK market, followed on Monday by a possible reduction in Norwegian exports, analysts at Thomson Reuters Point Carbon said.

Britain’s Met Office said temperatures could reach 10 degrees Celsius by the weekend and that there were signs of more typical conditions for this time of year by mid-April.

“This would leave the rest of the month with nearer average temperatures, albeit still with a risk of overnight frost,” it said.

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