UK Gas Prices Rise on Crude Oil Gains

British wholesale gas prices traded higher on Thursday as rallying oil prices pulled up forward and prompt contracts.

 

Gas for immediate delivery rose 0.20 pence to 34.40 pence per therm by 1017 GMT, while gas for day-ahead moved 0.25 pence higher to 34.45 pence per therm.

 

Lacking strong alternative price drivers, gas contracts tracked Brent crude oil's overnight gains, up 1.23 percent at $49.38 a barrel, as U.S. inventories and the dollar fell.

 

Further support to UK gas comes from rising front-year carbon prices, up 2.83 percent to 4.72 euros a tonne, and the pound's weakness against the euro, Marcel Boonaert, head of trading and portfolio at Wingas UK said.

 

"Prompt contracts have opened higher this morning, taking direction from an increase in contracts further out," due to higher oil prices, he added.

 

Among later-dated contracts, the benchmark winter 2016 delivery period saw gains of 0.75 pence to 45.20 pence per therm.

 

Overall, the UK gas system was slightly oversupplied, with demand at 191 million cubic metres (mcm) and supply at 195 mcm, National Grid (NGG) data showed.

 

Production in Norway, Britain's largest gas supplier, fell to 256 mcm/day from 270 mcm/day in the previous session likely due to an unplanned outage affecting the Gullfaks field, analysts at Thomson Reuters said.

 

As a result, Norwegian flows to the UK via the Vesterled pipeline fell slightly. But exports to continental Europe from Britain were strong.

 

In the Dutch gas market, the day-ahead gas contract at the TTF hub rose 0.28 euro to 14.35 euros per megawatt-hour.


(Reporting by Oleg Vukmanovic in Milan; editing by Nina Chestney)