U.K. natural gas for within-day delivery jumped to the highest level since March 2006 as Norway cut supplies following a power failure at its Ormen Lange gas field, Europe’s third-largest.
The contract climbed as much as 64 percent, the biggest gain since January 2010, according to broker data from Marex Spectron Group Ltd. on Bloomberg. Production from Royal Dutch Shell Plc (RDSA)’s Nyhamna gas processing plant in northern Norway, which handles fuel from Ormen Lange, is reduced by 53 million cubic meters a day today and 37 million tomorrow after storms caused a failure in the national power grid, according to Gassco AS. Output was cut by 57 million yesterday and 32 million on March 2, it said.
“The timing and extent of these offshore outages has unsettled a lot of people,” Craig Lowrey, a consultant at The Utilities Exchange Ltd. in Ipswich, England, said today by telephone. “It highlights the nervousness of traders that we have seen this response.”
The reaction in U.K. prices, the benchmark for Europe’s 800 billion-euro ($1 trillion) gas market, demonstrates Britain’s record reliance on Norwegian pipeline supplies after liquefied natural gas shipments slumped 53 percent in the five months through February from a year earlier, according to data compiled by Bloomberg.
Same-day gas rose to 115 pence a therm, the most since March 13, 2006, when it reached a record 255 pence a therm, and was at 96 pence at 3:36 p.m. London time, Spectron data show. Day-ahead gas added as much as 25 percent to 89 pence a therm before trading at 78 pence.
The next-month contract advanced 0.4 percent to 67.8 pence a therm. That’s equivalent to $10.21 per million British thermal units and compares with $3.49 per million Btu of front-month U.S. gas.
Flows from Norway, the U.K.’s biggest source of imported gas, were at 65 million cubic meters a day after dropping to 34 million yesterday, compared with a 30-day average of 108 million, Gassco data show. Norway was the source of a record 48 percent of U.K. gas on Dec. 26, according to Gassco and National Grid Plc data compiled by Bloomberg.
Inventories at Rough, the U.K.’s largest gas-storage facility, were at 6,909 megawatt-hours yesterday, the lowest level for the time of year since at least 2004, National Grid Plc (NG/) data show.
The delivery network will contain 356 million cubic meters of gas at 6 a.m. tomorrow, little changed from 24 hours earlier, National Grid data show. It predicted earlier that closing linepack would be as low as 286 million.
Demand in the 24 hours to 6 a.m. tomorrow is predicted at 305 million cubic meters, grid data show. Total flows were at 315 million cubic meters a day versus a 30-day average of 336 million after earlier dropping to 269 million.
Gas accounted for 30 percent of U.K. power production at 3:45 p.m., grid data show. Coal generated 47 percent, nuclear 15 percent and wind 1.6 percent.
Electricity for the next working day surged 26 percent to 65 pounds a megawatt-hour, the highest since February 2012, broker data show.
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