UK GAS-Prices Surge on Oil Rally
British gas prices rose on Friday afternoon, reversing earlier losses as oil prices rallied on hopes a global supply glut may be easing, and an outage at Norway's Skarv field was extended.
The contract for gas delivery in June had jumped by almost 5 percent to 29.39 pence/therm by 1545 GMT, while the contract for gas delivery next winter was up by 2.3 percent to 36.20 pence/therm.
Oil prices jumped more than 2 percent on Friday and were poised for a third week of gains as market sentiment turned more upbeat.
Strong gasoline consumption in the United States, increasing signs of declining production around the world and oilfield outages have underpinned a return to investment in the sector, traders said.
An ongoing outage at BP's Skarv gas field offshore Norway was extended until Saturday, with production capacity cut by 10.8 million cubic metres (mcm) per day on Friday, supporting prompt prices.
British gas for within-day delivery rose by 3.6 percent to 31.50 pence per therm, while prices for next Monday gained 3.9 percent to 31.90 pence/therm.
Norwegian gas imports through the Langeled pipeline, Britain's main subsea gas import route, have already been down to 22 mcm/day due to ongoing maintenance at Easington terminal, which is scheduled to last until May 3.
The reduction in supplies from Norway comes at a time when gas demand for heating was set to rise due to falling temperatures in Britain.
Demand for Friday was forecast to be at 254 mcm, about 29 percent above the seasonal norm, National Grid (NGG) data showed.
"It is expected to remain cold for the rest of next week, with a mix of sunshine and showers, often accompanied by a brisk northerly wind," the UK Met Office said.
Supply, however, should be improved with arrival of new liquefied natural gas (LNGLF) (LNG) cargoes.
Two LNG tankers confirmed Britain as their destination from Qatar on Friday, taking the number of LNG tankers expected to arrive in the country over the next 10 days to four.
In the European carbon market, front-year allowances firmed 0.2 euro or 3.48 percent, to 5.95 euros a tonne.
In the Netherlands, the day-ahead gas price at the TTF hub rose 0.42 euro/MWh or 3.3 percent at 13.20 euro/MWh.
(Reporting by Nerijus Adomaitis in Oslo)
