LONDON: British spot gas prices rose nearly 25 percent from pre-weekend closing levels as colder-than-expected weather boosted demand and storage facilities supplied their remaining gas at high prices.
Day-ahead gas prices rose as high as 88 pence per therm when the market opened on Monday versus 72 pence at the close on Friday. They fell back to 80 pence by 0950 GMT as more supply became available, mainly from Norway.
"Gas storage was used a bit over the weekend and it looks like there's high confidence in colder weather to come over the next couple of weeks," said one UK gas market analyst at a consultancy.
Levels at Britain's largest storage site at Rough were now 80 percent below the lowest point seen last winter, showing how much more dependent Britain was on stored gas this winter than in the 2011/12 season.
Medium-range storage sites were also supplying gas overnight to cover higher-than-expected consumption, National Grid data showed, and traders said only a few days' worth of gas supply was left in the facilities.
"Most of them are empty and then you have Hatfield and Humbly with more days," said one gas trader at a utility.
British gas demand was pegged at 12 percent above seasonal norms as temperatures dropped 4 degrees Celsius below levels usually seen at this time of the year.
Imports from Norway increased on Monday but uncertainty lingered over supply from Norway's Oseberg oil and gas field which was shut down last week after multiple gas leaks.
Traders said cold weather and worryingly low storage levels also supported prices further out and front-month April gained 0.50 pence to 68.10 pence.
The front-season contract traded up slightly in line with the bullish prompt, but weakness in the oil market following concerns in the global stock market about Cyprus' bank bailout capped gains.
Summer 2013 gas gained 0.10 pence to 65.50 pence and winter 2013 traded at 72.30 pence, up 0.10 pence also.
British power prices also rose on Monday, tracking the bullish gas market and following a rise in demand driven by the cold weather conditions.
Day-ahead baseload power gained more than 5 pounds to 60.40 pounds per megawatt-hour on Monday.
Gas and coal-fired power plants provided nearly equal amounts of generation capacity at around 16 gigawatts.
Comments
Comments are closed for this article.