UK GAS-Prices Up, Output Cuts Hit Dutch Imports

Gas network undersupplied by 16.6 mcm/day; potential new Groningen cuts reduce Dutch imports.

British spot gas prices rose for a second day on Tuesday as Norwegian and Dutch imports declined, while potentially deeper production cuts at Europe's biggest gas field, Groningen, tightened supply outlooks.

Prices for within-day delivery jumped 0.85 pence per therm to 44.25 p/therm by 0855 GMT, compared with their last settlement.

The network was 16.6 million cubic metres (mcm) per day undersupplied as Dutch flows through the BBL pipeline had fallen to zero by 0808 GMT while Norwegian deliveries had almost halved from a day earlier.

Higher gas prices at the TTF gas trading hub in the Netherlands, led by Monday's news that the government may cut more production at Groningen, reduced exports to Britain, said Marcel Boonaert, head of trading and portfolio at Wingas UK.

"Summer delivery contracts have ticked up further on continued uncertainty over Dutch production levels," he said.

Production caps affecting output from the Netherlands, one of Britain's main suppliers, could affect UK-bound supply.

Summer gas delivery contracts, such as for July, gained 0.05 p/therm to 43.70 p/therm.

Norwegian flows through the Langeled pipeline dropped to about 8 mcm, from overnight highs of 18 mcm and Monday daytime average rates of just above 15 mcm. More Norwegian gas was being diverted to mainland Europe.

"Going forward we expect Langeled to fluctuate between 10-15 mcm until the end of Ormen Lange (a major Norwegian gas field) maintenance on 2 July," said analysts at Thomson Reuters Point Carbon.

British daily gas demand was estimated at 174.3 mcm while supplies lagged at 157.7 mcm, according to National Grid (NGG) data.

UK Continental Shelf flows were hardly changed at 127 mcm.

Gas prices further along the curve edged lower, with the benchmark winter 2015/2016 gas contract down 0.05 p/therm at 48.70 p/therm.

In the Netherlands, the day-ahead gas price at the TTF hub was down 0.28 euros at 21.08 euros per megawatt-hour.

Europe's benchmark front-year carbon price was down 0.01 euros at 7.49 euros per tonne on ICE Futures Europe.

Reporting by Oleg Vukmanovic