Contract prices rose across the board on the UK's NBP gas trading hub Tuesday morning, spurred by stronger oil prices as well as tightness in the system and overnight storage withdrawals.
"For people to be withdrawing storage during IUK [UK-Belgium Interconnector pipeline] maintenance is unprecedented," a source at an investment bank said.
Same-day gas rose by 0.35 pence/therm from Monday's close to trade midday in London at 55.00 p/th. The next-day contract was trading at the same value, having gained 0.30 p/th.
The IUK pipeline, closed for scheduled annual maintenance June 13, is expected to resume operations June 28. It had been shipping an average daily amount of 24 million cubic meters/day from the UK to Belgium.
"If the system is tight now with IUK down and we're withdrawing from storage; it's just going to get tighter once it reopens," the source said, "I think it is something the market has ignored to some degree."
The Aldbrough storage facility began withdrawing gas at rates of in excess of 15 million cu m/day overnight.
The UK's gas system opened 8 million cu m short as a fall in flows via the Langeled pipeline strained supplies, but was long at noon by 7 million cu m aided by an increase in imports from the Netherlands.
Also, flows of domestically produced gas increased overnight following a return to operations at the St Fergus SAGE terminal after 12-hours of scheduled maintenance Monday.
Forecast gas demand for the day by National Grid was pegged at 169.8 million cu m.
The front month and quarter contracts heard similar gains with gas for July delivery increasing by 0.45 p/th in value at 54.85 p/th and Q3 12 gas moved 0.35 p/th higher at 55.00 p/th.
Crude futures supported seasonal gas contracts as oil prices edged higher in midday European trading, with Brent receiving support from an industrial strike in Norway, but volumes remained thin on cautious sentiment ahead of this week's EU leaders summit.
At 1050 GMT, August ICE Brent traded 75 cents higher at $91.76/b.
Winter 12 gas pushed 0.25 p/th higher to 63.50 p/th.
Summer and Winter 13 contracts each increased by 0.40 p/th to 57.00 and 56.10 p/th, respectively.
