Power climbs further but gas soft on ample supply

Source: Reuters

Date :07/10/2008 13:53:28

Power prices continued their ascent on Tuesday on worries over tight margins next month, while gas prices fell as increased winter supply has kept the system long.

Baseload power prices for November traded as high as 144.00 pounds per megawatt hour, up from 135 pounds on Monday. A whole-month contract topped 130 pounds for the first time last week.

Electricity for Wednesday fetched 122 pounds, while December added 2.50 pounds to 120.50 pounds and the 2009 first quarter was up 0.91 pounds to 94.41 pounds.

"It's very strong market. There are concerns over the tight system in November," said a trader.

Data from network operator National Grid showed 24 of 89 power reactors in Britain were offline Tuesday morning, against 23 a day earlier. They included the 645-megwatt DRAX coal-fired plant and 485-megawatt Aberthaw B-8, shut down overnight.

In the gas market, prices fell as supply more than offset outflows to continental Europe, despite cooler weather.

"The market is pretty long," said a trader.

"Norwegians need to reach the target production and storages are full...It's a bit cold, but everything is quite acceptable." Gas for delivery on Wednesday was down 2 pence at 58 pence per therm, Tuesday shed 2 pence to 57 pence and November was down 1.75 pence at 79.00 pence.

Distant months were also under downward pressure, despite a small recovery in oil prices from eight-month-lows seen on Monday, with the 2009 first quarter down 1 pence at 91.25 pence and Summer 2009 down 0.90 pence at 71.85 pence.

U.S. light crude was about $90 a barrel and London Brent at about $85.50.

Norway said its total oil and gas output would grow by 3.8 percent next year from 2008 and rise further by 2012 as more production of natural gas offset less oil.

(Reporting by Nao Nakanishi)

LONDON (Reuters)