UK gas prices surge as oil rallies on Saudi, Libya
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] Continued...