LONDON: British wholesale gas prices jumped on Friday afternoon after Ukraine's prime minister told his country to brace for Russian gas cuts after the two sides failed to reach agreement, raising the prospect that European supplies could be threatened.
The day-ahead contract closed 6.3 percent higher at 41.65 pence/therm, after hitting a seven-day high of 41.75.
Prices along the forward curve also ended up by as much as 5.3 percent.
Ukrainian Prime Minister Arseny Yatseniuk ordered the country's energy sector to prepare for Russian gas cuts from Monday after Moscow and Kiev failed to resolve their differences over prices.
Moscow had set a June 16 deadline for Ukraine to pay off part of its gas debt of $1.95 billion.
"The outage is looking more likely now, but I wouldn't say it's overly serious because gas storage levels across Europe are so healthy," said Trevor Sikorski, an analyst with London-based Energy Aspects.
A mild winter and the prospect of a halt in Russian supply have prompted utilities to stock up on gas.
British storage facilities are 76 percent full, leading some analysts to believe Britain will be cushioned from any disruption in European gas flows in the short term. Britain gets around 5 percent of its gas from Russia.
In contrast, Russia supplies around a third of continental Europe's needs, with almost half sent via Ukraine.
While Russia will likely attempt to continue exporting gas to Europe via Ukraine next week, a key uncertainty is whether that supply will end up with its ultimate buyers.
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