London, 12 March - Key UK gas and power prices have hit their highest levels since February 2012, as demand has increased with colder weather and supply has tightened.
The wholesale price for gas on the British market hit £1/therm on Tuesday morning as ongoing below-normal temperatures kept demand high and concerns over low gas stocks in store persisted.
The Within-Day gas contract reached an intra-day high of £1.05/therm, up 11.05 pence/therm from Monday afternoon. The key Day-ahead contract, for delivery on Wednesday, traded up to 97.50 pence/therm. Gas for delivery on Tuesday closed Monday’s trading session at a 13-month high of 88.50 pence/therm.
UK Day-ahead power prices also soared, with power for delivery on Wednesday trading at £66.50/MWh on Tuesday.
Gas prices were boosted by a brief cut in availability from the UK’s only long-range storage site at Rough. The supply tightness was exacerbated by another short cut in supply from the Total-operated terminal at St Fergus in Scotland, where the Norwegian Vesterled pipeline brings gas onshore to the UK.
Concerns over low domestic gas stocks have also played a role in spot price increases. The Centrica-operated Rough facility is now less than 14% full, according to data from National Grid. This is significantly down from last year and in line with levels last seen at the start of 2011.
An ongoing lack of liquefied natural gas (LNG) vessels arriving at British terminals has removed one source of flexible gas supply. Gas prices in Asia are higher than Europe, so spot LNG cargoes are being diverted there instead of going to the UK.
UK power prices have been boosted by high gas prices, as gas is used to generate power – in February, gas generation accounted for 27% of the UK’s production, data from Elexon shows.
For further information please contact:
Tom Marzec-Manser (gas)
t: +44 20 7911 1964
Zoe Double (power)
t: +44 20 7911 1875