Bloomberg News

U.K. Natural Gas Rises to 11-Month High Amid Freezing Weather

January 17, 2013

U.K. natural gas for within-day delivery rose to an 11-month high as temperatures fell to the lowest since February, boosting demand for the heating fuel.

Same-day gas surged as much as 9.2 percent, the biggest jump since April 2, according to broker data compiled by Bloomberg. The low temperature in London was minus 6 degrees Celsius (21 Fahrenheit) today and will drop to minus 7 degrees Jan. 25, CustomWeather Inc. data on Bloomberg show.

Tomorrow, snow will be “widespread through the morning, continuing through the afternoon and evening,” the Met Office said on its website. The maximum temperature in London will be zero degrees while a southeasterly wind creates a “bitterly cold” feeling, it said.

Gas for today added as much as 6.4 pence to 76 pence a therm, the highest price since Feb. 10, and traded at 71.85 pence a therm at 5:26 p.m. London time. Month-ahead gas climbed 1.6 percent to 68.5 pence a therm. That’s equivalent to $10.94 per million British thermal units and compares with $3.48 per million Btu of front-month U.S. gas.

Within-day gas on the APX exchange, used by network manager National Grid to buy or sell gas to ensure the system’s safe operation, climbed as high as 1 pound a therm overnight, the first time since January 2010.

Demand in the 24 hours to 6 a.m. tomorrow was predicted to be 385 million cubic meters, compared with a seasonal norm of 309 million, National Grid Plc (NG/) data show. The delivery system will contain 370 million cubic meters of gas at the end of the period, up from 349 million at the beginning, grid data show.

Gas Imports

Imports from Norway, the U.K.’s biggest source of imported gas, were at a rate of 113 million cubic meters a day after reaching 138 million yesterday, the most since Bloomberg began compiling the data in January 2012. Imports from Belgium were at 35 million cubic meters a day pace, the most since Dec. 10, data from Interconnector U.K. Ltd. showed.

Statoil ASA (STL) of Norway said gas production was reduced by 10.8 million cubic meters a day for one day.

A loss of production from the In Amenas gas field in Algeria following an attack by militants will reduce deliveries to Europe by as much as 9 billion cubic meters a year, an amount that will probably be replaced with Russian gas, Thierry Bros, a gas analyst at Societe Generale SA in Paris, said in an e-mailed research report.

“We could see gas prices trending upwards in the coming days. But we believe that unless the situation deteriorates more than our hypothesis, NBP gas prices should be capped at 70 pence a therm,” he said, referring to the National Balancing Point, the U.K. gas-trading hub.

Gas accounted for 35 percent of U.K. power production at 4:05 p.m., grid data show. Coal generated 41 percent, nuclear 17 percent and wind 3.9 percent.

Electricity for tomorrow fell 0.5 percent to 53.75 pounds a megawatt-hour, broker data show.

To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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