British prompt gas prices rose on Monday morning as cold weather lifted demand and left the system undersupplied, while low storage inventories made the system more vulnerable to price swings.
Tuesday gas was up 2.70 pence to 72.90 pence per therm at 1030 GMT largely because the system was undersupplied by 6 million cubic metres/day (mcm) while cold weather forecast for this week kept demand expectations high.
“People are rightly worried about the weather…if the cold continues past next week in a significant way then medium-range storage is not going to be there to fill the gap,” a UK gas trader said.
Low inventories at mid-range storage sites, high demand and supply issues in Norway briefly pushed within-day gas prices to one-year highs on Friday.
Gas for immediate delivery rose 1 pence to 75 pence on Monday.
Withdrawals from storage fell to 75 mcm from 109 mcm on Friday as stockpiles at Rough, Britain’s biggest such facility, and other mid-range sites fell below their levels at this time last year.
Dwindling stocks are forcing operators to replenish some sites, while others are pumping out gas to fetch high prices.
“Nominations suggest net storage withdrawals of 43 mcm today with Rough and Holford withdrawing, while Aldbrough is nominating 13 mcm of injections,” analysts at Thomson Reuters Point Carbon said.