LONDON: British wholesale natural gas and power prices rose on Tuesday morning as growing demand met low supplies, leaving the system short.
Gas prices for delivery within the day were trading at 49.85 pence per therm at 0920 GMT, up 4.5 pence since their last close, and prices for Wednesday delivery were up 1.85 pence to 51 pence a therm.
The price rises were down to an undersupplied system. Britain's gas demand was expected to be 202.7 million cubic metres (mcm) on Tuesday, broadly in line with the seasonal norm, but with supplies seen at just 193.2 mcm, the system was left around 10 mcm undersupplied, implying the need for higher imports or storage withdrawals.
Analysts said the short system was largely a result of rising demand.
"It's going to get quite a bit colder tomorrow, which will lift heating demand from 110-120 mcm today to 140 mcm tomorrow," one gas trader said.
Meteorologists said that average British temperatures were expected to drop from 11.3 degrees Celsius on Tuesday to below 10 degrees on Wednesday.
"Going forward, as the weather gets colder and demand picks up, we expect natural gas prices to continue to rebound," British bank Barclays said on Tuesday in a research note.
In Britain's wholesale power market, prices also rose because of the rise in demand, which coincided with large-scale ongoing nuclear outages of a combined capacity of over 5,000 megawatt (MW) due to unplanned outages, annual maintenance as well as safety inspections.
Power prices for baseload (24 hours) delivery on Wednesday were trading at 43 pounds per megawatt-hour (MWh), up 2.75 pounds since their last close.
"Despite the fact that wind power capacity is expected to rise by a gigawatt to 6.7 GW by tomorrow, the nuclear outages kept the market tight," a power trader said.
Comments
Comments are closed for this article.