LONDON: British natural gas prices for delivery next winter continued to rebound from recent record lows on Thursday morning as analysts pointed to an increase in demand at the end of the year.
British gas for winter 2014 traded at 57.90 pence per therm at 0840 GMT, up 1.18 pence on Wednesday's settlement.
The contract is now up almost 6 percent since hitting a record low of 54.70 pence per therm on July 11.
"The winter (contract) was looking a little oversold at the lows and that has triggered some buying," a gas trader said.
Meanwhile, analysts at Energy Aspects said in a research note published late on Wednesday that demand for UK gas in the winter months could increase.
"In Q4 14 and Q1 15, gas demand is expected to increase y/y on the back of a colder winter," the analysts said.
"Demand from the power sector also remains an upside risk in the UK. The loss of coal plants means gas will have to play a larger role, even at higher gas prices," they added.
Nine UK-based coal- and oil-fired plants with a combined generating capacity of 11.5 gigawatts are due to shut by 2015 under European Union rules to curb pollution. Many, such as E.ON's 1,940-megawatt Kingsnorth plant, have already closed.
Spot gas prices were little changed as stable supplies led to a balanced system.
Gas prices for within-day delivery were at 37.40 pence per therm at 0840 GMT, up 0.05 pence on Wednesday's close. Prices for Friday delivery were up 0.50 pence at 37.40 pence per therm.
With supply flows at about 177.2 million cubic metres (mcm) per day on Thursday and demand expected to be about 175.3 mcm, the system was 1.9 mcm oversupplied, National Grid data showed.
Analysts at Thomson Reuters Point Carbon said day-ahead prices could come under pressure later in the day due to an increase in forecasts for wind generation, which could reduce gas demand.
Power supply from wind is forecast to hit a peak of 3,351 MW on Friday, National Grid data showed, up from levels below 800 MW on Thursday.
Comments
Comments are closed for this article.