LONDON: British wholesale natural gas prices rose on Monday morning due to undersupply in the UK gas system, forecasts of lower temperatures and the possibility of further European Union sanctions on Russia.
Gas for day-ahead delivery was up 1.10 pence at 54.50 pence per therm, while within-day gas was up 0.95 pence per therm.
The UK gas system was expected to be 12 million cubic metres (mcm) short of gas on Monday, with flows forecast at 244 mcm/day and demand at 256 mcm.
On the supply side, flows from Norway via the Vesterled pipeline dropped overnight. In the UK Continental Shelf, an outage at Total's St Fergus terminal has reduced flows by 7 mcm/day.
The InterconnectorUK (IUK) pipeline to continental Europe is also in export mode, but there are limited flows.
"We expect IUK exports to remain relatively inactive and as the UK market seems (set) to tighten on colder temperatures we expect IUK to switch to UK import mode," said analysts at Thomson Reuters Point Carbon.
Meanwhile, gas for delivery next week rose by 1.55 pence or almost 3 percent to 55.00 pence per therm, on colder weather forecasts for the coming 10 days.
News that the European Union may impose sanctions on more Russian-backed separatists on Monday also helped support prices further along the curve, with the Q1 2015 contract gaining 0.70 pence at 55.80 pence per therm.
In the Dutch TTF gas market, prices were also higher, with the December contract up 0.35 euros at 22.65 euros per megawatt hour.
In Europe's carbon market, benchmark EU Allowances (EUA) edged up 0.05 euros at 6.67 euros a tonne.
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