March 14, 2012 / 11:28 AM / 6 years ago

UK gas rises on tight supply, power up on outages

* Gas demand firms to 6 pct below seasonal norms

* St Fergus Total to reduce output on Thursday

* Two unplanned power outages lift electricity prices

LONDON, March 14 (Reuters) - British prompt gas prices rose to an 11-day high on Wednesday as the system was undersupplied due to a drop in flows from liquefied natural gas (LNG) terminals, while planned maintenance is set to further squeeze supply margins on Thursday.

Within-day gas prices rose to 59.90 pence at 1100 GMT, up nearly a penny on the previous session, while Thursday gas traded 1.10 pence higher at 60.00 pence.

“The system is short so we are battling to match demand, plus flexible supply is kicking in,” said one UK gas market analyst.

UK gas demand rose compared to the previous session, climbing to 6 percent below seasonal norms, National Grid data showed.

Supply from the South Hook and Isle of Grain terminals fell on Wednesday morning, the data also showed, leaving the market struggling to meet demand levels.

On Thursday, Total’s St Fergus terminal is planned to cut flows for 12-18 hours by around 12 million cubic metres per day (mcm/d), the operator said.

The terminal was sending out around 19 mcm/d on Wednesday.

Weather conditions are set to remain warm, but temperatures are forecast to drop at the weekend, the Met Office said.

Further out, prices also rose, pushed by momentum on the prompt and defying a bearish oil market.

The benchmark front-season contract extended gains above the 60-pence mark to 60.40 pence, up 0.40 pence on the previous session.

“People believe the foundations are being dug for a push up, so the curve seems to be trading in a tight range but on a upward gradient,” the analyst said.

In the power market, prompt prices also rose, spurred on by gains in the gas market but also on the back of unplanned nuclear and coal plant outage which tightened supply margins.

Baseload day-ahead power rose to 46.50 pounds per megawatt-hour (MWh), up 1.30 pounds day on day.

Magnox reduced output from its Wylfa 1 nuclear reactor to 284 MW late on Tuesday due to a boiler outage.

At the same time, one unit at RWE npower’s huge Aberthaw coal-fired power plant remained offline on Wednesday after a fault on a local substation. (Reporting by Karolin Schaps; Editing by Hans-Juergen Peters)

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