September 14, 2012 / 12:15 PM / 7 years ago

UPDATE 1-UK prompt gas gains on shortages, demand

* Prompt gas holds ground at 19-week high

* UK undersupplied by 26 mcm/day of gas

* Record 4 GW wind power fails to impact prices (Adds record wind generation, updates prices)

LONDON/MILAN, Sept 14 (Reuters) - British prompt gas prices rose on Friday, marking a fourth straight day of gains, driven by reduced supplies while cooler weather was expected to boost heating demand in some parts of the country.

Gas for Monday delivery increased over a pence to 61.75 pence a therm, gaining ground on a 19-week high achieved on Thursday, as the impact of maintenance in Norway and Britain continued to impact supplies.

The market was undersupplied by 26 million cubic metres/day despite demand running about 21 percent below its five-year average.

High prices caused by gas shortages could trigger withdrawals from underground storage sites later in the day to help balance the system, a trader from a European utility said.

A sustained rise in prices could also reduce exports to Belgium through the sub-sea interconnector as UK gas becomes less competitive, he said.

“We expect local residential consumption of gas to increase as the temperature is dropping below its normal level,” analysts at Point Carbon said.

Britain’s Met Office, in its six to 15 day forecast, added that: “Temperatures will be generally below average, and occasionally rather cold, but perhaps a little above normal at times towards the southeast.”

Exports through the UK Interconnector to Belgium rose to 16 mcm/day, according to the pipeline operator’s website.

Front-month gas gained ground in line with bullish conditions on the prompt market, rising 0.55 pence to 60.55 pence before dropping back to 60.40 pence again later in the morning.

Flows from the Isle of Grain LNG terminal touched highs of 23 mcm/day overnight but dropped sharply to about 4 mcm/day earlier this morning.

Storage withdrawals from mid-range facilities fell almost to zero this morning after touching highs of 34 mcm/day overnight.

Norwegian deliveries via the Langeled pipeline turned lower to 27 mcm/day from 36 mcm/day overnight, while flows from Centrica’s South Morecambe gas field ceased altogether.

Further forward, the benchmark winter 2012 winter gas contract rose 0.6 pence to 66.50 pence supported by stronger Brent crude oil price on hopes for stronger global demand for oil.

RECORD WIND FAILS TO IMPACT PRICES

In Britain’s power market day-ahead prices rose 1.9 pounds from Thursday’s session to 43.70 pounds per megawatt (MW) hour, despite record wind power generation recorded in Britain.

Britain’s combined wind power generation facilities produced over 4,000 megawatt (MW) of electricity on Friday morning, the UK’s renewable lobby group said.

“Wind turbines fed an all-time high of 4.131 gigawatts into the National Grid at 09.56am this morning - enough to power more than 3 million British homes. An average large power station can generate a gigawatt, so the record equates to the output of more than four conventional power stations,” Renewable UK said in a statement.

The group said that this equated over 10 percent of the total amount of electricity being fed into the grid at that time.

But the record in wind power generation failed to impact prices because some 2,280 MW of nuclear capacity remained offline on Friday, with output from Britain’s reactor fleet contributing 17.4 percent to the overall power mix. Coal bagged the greatest share of electricity generation with 41.3 percent. (Reporting by Oleg Vukmanovic and Henning Gloystein)

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