LONDON: Spot natural gas prices in Britain rose to a four-month high on Tuesday, buoyed by tight supply and concerns over the situation in Ukraine.
The day-ahead contract opened at 51 pence/therm, its highest since April, before slipping back to 50.25 pence by 0825 GMT, up 0.7 percent on Monday's close.
Britain's gas system was poised to be slightly undersupplied on Tuesday, according to the National Grid, with forecast demand outpacing supply by around 5 million cubic metres (mcm).
Analysts at Thomson Reuters Point Carbon said the resumption of gas imports from Norway over the Langeled pipeline, expected later on Tuesday, could put downward pressure on day-ahead prices.
Langeled, which can shift 70 mcm per day, is currently shut for one day of maintenance.
Analysts noted that the situation in Ukraine remained tense as EU leaders discussed new sanctions against Russia, a move that could affect European gas prices for future delivery.
"Any news that reads as a reduction in tensions will help ease the upward pressure on prices," London-based Energy Aspects wrote in an emailed note.
"If talks provide little progress and tensions continue to escalate, the probability of a supply disruption will continue to grow, and prices should at the least retain current values," it added.
The front-month and winter 2014 British gas contracts both shed 0.3 percent each to 52.65 and 61.20 pence/therm, respectively.
British gas prices for within-day delivery have risen by more than 40 percent since early July, mostly because of concerns about the Ukraine crisis.
In anticipation of potential supply disruptions, gas storage levels across Europe are around 16 billion cubic metres (bcm) higher than this time last year and 5 bcm above levels recorded at the start of winter 2013, Energy Aspects said.
Meanwhile, meteorologists forecast temperatures across Britain above seasonal norms until around Sept. 7, while wind speeds are expected to remain muted over the next few days.
Day-ahead baseload electricity prices in Britain also rose to a near six-month high on Tuesday, gaining 25 pence or 0.6 percent to 45 pounds per megawatt-hour.
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