Gas price up on colder weather, risk of Dutch production cap

Reuters
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A gas cooker is seen in Boroughbridge, northern England in this November 13, 2012 file photograph. REUTERS/Nigel …

LONDON (Reuters) - British wholesale gas prices rose slightly on Thursday morning as temperatures were dropping and traders priced in the risk of the Dutch government introducing a production cap on its huge Groningen field.

Gas prices for delivery on Friday were trading at 65.80 pence per therm at 0900 GMT, up 0.5 pence since opening, and prices for delivery within the day were up 0.2 pence to 65.70 pence a therm.

Power prices for baseload (24 hours) delivery on Tuesday were also up, rising 1.1 pounds ($1.80) per megawatt-hour (MWh) to 46.60 pound per MWh.

The rises came despite an oversupplied system. National Grid data showed that Thursday's demand of 268.4 million cubic metres (mcm) would be met by 275.3 mcm of supplies, leaving the system almost 7 mcm long.

Traders said that the price rises were a result of a colder weather outlook for the rest of the week and because of the risk of a cap on the Groningen gas field.

"The Dutch cabinet will discuss future production plans for the Groningen gas field tomorrow. Any decision on a cap on production will impact also UK prices," analysts at Thomson Reuters Point Carbon said.

The field in the north of the country - one of the world's largest - is operated by a joint venture between Royal Dutch Shell and ExxonMobil.

An announcement could come as soon as Friday following the weekly cabinet meeting, local media reported on Thursday.

Last year, several politicians, including members of the Labour Party which is part of the coalition government, called for a review of gas extraction in Groningen province following a series of earth tremors, some of which were strong enough to cause cracks in buildings.

(Reporting by Henning Gloystein; Editing by John Stonestreet)

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