LONDON: British wholesale gas prices firmed on Wednesday morning, despite ample flows, on concerns that an escalation of the crisis in eastern Ukraine could disrupt natural gas supply.
The UK gas system's supply and demand dynamics were bearish on Monday morning but were ignored by the market.
Flows were forecast to be 163 million cubic metres a day and demand was seen at 155 mcm, meaning the system was around 8 mcm oversupplied, National Grid data showed.
Gas for delivery on Thursday was trading at 38.45 pence per therm at 0909 GMT, 0.50 pence higher than the previous settlement.
Traders were concerned about escalating tension in Ukraine and potential disruption to gas flows from Russia to Europe via Ukraine.
Polish Prime Minister Donald Tusk said on Wednesday he suspected that the threat of a direct intervention by Russia's military in Ukraine has risen over the last couple of days.
Russia has been conducting exercises near the border with Ukraine, raising concerns on the ground and in a number of Western capitals.
Ukraine and its Western allies accuse Russia of orchestrating a revolt and arming rebels - something denied by Moscow. The United States and the European Union have imposed sanctions on Russia.
Moscow has also called an emergency meeting of the United Nations' Security Council over the "humanitarian situation" in Ukraine.
"News of potential UN intervention in eastern Ukraine is increasing worries over interruptions to current gas transit levels through the country," one gas trader said.
"Some traders are closing short positions, which is having the effect of supporting prices, even though the fundamentals of the market are bearish," another trader added.
Further along the curve, prices were also higher.
The September contract was up 0.25 pence at 40.55 pence per therm and the October contract rose by 1.35 pence to 48.50 pence per therm.
Gas for the winter 2014-15 season was 0.25 pence higher at 58.80 pence per therm.
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