LONDON (Reuters) - British wholesale gas prices remained high in volatile trading on Wednesday, as several production outages restricted supplies to the system amid high demand and low stored reserves.
"The market is choppy.. if something drops off the network people get very nervous," a trader from a European utility said.
The price of gas for Thursday delivery rose 1.25 pence to 99 pence per therm, due to high demand caused by cold weather and gas for immediate delivery rose 0.25 pence to 98.75 pence.
Prices for both delivery periods jumped above 100 pence earlier in the morning before steadying just below that level at 10.30 a.m. British time, price data showed.
That compares with a near record on Friday of about 150 pence. (http://link.reuters.com/mes86t).
Total reduced output by 5 million cubic metres from its St. Fergus terminal for 24 hours from 6.00 a.m. British time, it said in a market message.
A gas field in the North Sea called Britannia was on Wednesday due to undergo maintenance for two days, restricting supplies by 6 to 7 mcm of supplies to the system, ConocoPhillips said.
The high prices were a result of unseasonably low temperatures across Britain for much of March. UK gas demand was 28 percent above the seasonal average at 372 mcm, National Grid data showed.
High demand has depleted gas storage sites by more than 90 percent with just 465 mcm left in tanks, according to figures published by Gas Storage Europe.
Withdrawals from rapidly depleting storage sites continued on Wednesday in response to high demand and prices.
"The April contract is trading almost 25 pence lower than spot prices. This is the most attractive time to sell stored gas," the trader said.
Britain's MetOffice said cold weather would last until at least the end of the week, with conditions remaining "cold or very cold, with moderate to severe frosts overnight."
U.S. forecaster Weather Services International also expects colder-than-normal weather across western Europe from April through June.
Projecting current depletion levels ahead, Britain could run out of gas storage by around April 8 or 9. (http://link.reuters.com/jes86t)
Baseload power prices for Thursday delivery traded at 75.15 pounds per megawatt hour, tracking gains on spot gas markets.
Britain's electricity generating capacity is expected to decline as ageing coal plants are taken offline, potentially triggering higher demand for gas.
"In the UK, we expect 8.8 gigawatts of power plant closures in 1Q13 (first quarter of 2013) - more than 10 percent of total capacity," Barclays Capital said in a research note on Wednesday, adding this will lead to a power price rise and increase demand for gas-fired power plants.
(Reporting by Oleg Vukmanovic; additional reporting by Henning Gloystein; editing by James Jukwey)