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LONDON, March 7 (Reuters) - Wholesale British gas prices surged again on Monday as oil markets were supported by conflict in Libya and rising unrest in the oil and gas rich Middle East, traders said.
Winter gas contract prices jumped to 68.50 pence per therm by 1010 GMT on Monday morning, up 1.60 pence from Friday and the highest level since May 2009.
The rally, which was seen across the UK gas market, came as Brent crude oil prices firmed to $117.40 a barrel LCOc1, up from Friday's close around $116, as Libyan clashes continued [ID:nLDE7260G5] and tensions in the world's biggest oil exporter Saudi Arabia rose. [ID:nLDE7250BZ]
Although the Libyan conflict has cut off only about 2 percent of Europe's gas supply since Feb. 22, fears that the wave of anti-government protests across the Middle East and North Africa could spread to bigger supplier Algeria have spooked gas markets.
"It is all risk premium from the Middle East," one trader at a UK utility said of Monday's rally, which saw Summer 2011 contracts rise 1.75 pence to 59.00 pence and April surge 1.65 pence to 58.90 pence ($9.59 per mmbtu).
UK gas prices are indirectly affected by oil prices because stronger oil means continental European gas suppliers may buy more gas in the UK over coming months as their oil-indexed supplies rise in price. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ANALYSIS on European gas supply: [ID:nLDE71N13V]
FACTBOX-North Africa, Middle East gas supply [ID:nLDE71O0DI]
Take a look on M. East, N. Africa unrest: [ID:nLDE71O2CH]
Reuters Insider TV on crisis: link.reuters.com/mav38r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Cool weather and tight supply supported the prompt, with gas for immediate delivery rising to 59.75 pence, up 2 pence from Friday, and gas for Tuesday hitting 60 pence GA2NB, the highest price paid for day-ahead gas contracts since the end of December.
National Grid forecast gas demand on Monday morning at 338 million cubic metres (mcm), below seasonal norms.
UK power prices also rose, driven higher by stronger gas prices.
Baseload power for Tuesday rose to 51 pounds per megawatt-hour (MWh), while April firmed to 50.85 pounds and Winter 2011/12 baseload surged over 2 pounds to 56.90 pounds, according to one broker. (Reporting by Daniel Fineren; Editing by Alison Birrane)