UK GAS-Spot prices drop to lowest since Oct. 2010

Thu Jun 5, 2014 7:58am GMT

* UK day-ahead power prices drop to 4-year lows

* Winter gas prices also at multi-year lows

* Societe Generale lowers Q4 gas price forecasts

LONDON, June 5 (Reuters) - British spot gas prices dropped to 40 pence a therm for the first time since October 2010 on Thursday morning as low demand and healthy supplies continued to weigh on the market.

Wholesale UK gas prices for delivery the next day traded at 40 pence per therm at 0730 GMT on Thursday, their lowest level since October 7 2010.

The renewed drop also means that British spot gas prices have shed 40 percent in value since the beginning of the year.

Traders said that the low gas prices were a result of high stocks following a mild winter and spring as well as healthy pipeline and shipped liquefied natural gas (LNG) supplies.

Research company Energy Aspects said that prices could drop to 38 pence a therm once maintenance work at Britain's main pipeline connection to continental Europe (IUK) this month prevents excess gas to be exported.

"June gas looks like it could come under further pressure as the IUK closure slows the increase in UK exports... This does support prices heading towards the 38 pence per therm level," Energy Aspects said.   Continued...

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