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LONDON, Feb 23 (Reuters) - British gas prices eased on Wednesday after surging on Tuesday when the crisis in Libya led to a cut in gas supplies to Europe and drove up crude prices, traders said.
Low demand for gas because of relatively mild weather in Britain and healthy supply from liquefied natural gas (LNG) terminals and the North Sea weighed on the prompt, while the surge in curve prices seen on Tuesday prompted some to sell for a profit on Wednesday.
After the winter 2011/12 contract traded at 63.35 pence per therm later on Tuesday, prices eased to 63.00 pence despite oil prices rising above $107 LCOc1 on Wednesday on continuing instability in oil exporting Libya.
Summer 2011 contracts fell 0.45 pence to 54.00 pence, while March fell 0.25 pence to 54.30 pence ($8.79 per mmbtu).
"Forecast demand is so below the seasonal norm it's hard for the prompt and indeed the summer contract to remain at those levels," said one UK gas market analyst.
Gas prices in other European countries also surged as supply to Italy from Libya via the Greenstream pipeline was cut on Tuesday. [ID:nLDE71L1YN]
But spot prices eased again on Wednesday, with day-ahead gas prices in the UK falling about half a penny to 54.45 pence, despite the ongoing closure of Greenstream. [ID:nRMENDE7G7]
Click here for a graphic showing European gas prices: here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
In the British power market prices also weakened in line with the sell off of gas contracts.
Day-ahead baseload power fell about a pound to 46.25 pounds per megawatt-hour, while Summer 2011 edged marginally lower to 47.75 pounds.
As gas is used as a fuel in a large number of Britain's power plants, gas prices exert a strong influence over electricity prices. (Reporting by Daniel Fineren; Editing by Alison Birrane)