UK gas prices ease on healthy supply, despite cold

Wed Feb 1, 2012 11:25am GMT

* Spot gas prices move slightly down on high supply

* Sub-zero temperatures expected until weekend

London Feb 1(Reuters) - British spot gas and power prices dropped slightly despite the cold on Wednesday morning as healthy supplies countered higher heating demand.

A Siberian cold front which has much of western Europe in its grip meant that gas demand in the UK was expected to rise to 381.5 million cubic metres (mcm) on Wednesday, about 15 percent (or 49.5 mcm) above the seasonal norm, National Grid data showed.

But expected gas flows were even higher at 407.4 mcm, driving prices slightly down from Tuesday and implying that some gas could be injected into storage.

UK gas storage levels were filled to 74.24 percent on Tuesday, compared with a European average of 66.01 percent, data from Gas Infrastructure Europe showed.

Analysts at Point Carbon said they expected spot gas prices to move sideways as high withdrawals from storage were expected to balance higher forecasted consumption on Wednesday.

Gas for next day delivery was trading around 61.35 pence per therm at 1040 GMT, slightly down from Tuesday's 61.50 pence, and within-day gas was trading around 59.90, down more than one pence from Tuesday.

The price rises in the past days meant that spot gas prices have now reached levels common during the winter heating season, but they still remain lower than during peak levels in late 2010 and early 2011.   Continued...

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