LONDON, April 15 (Reuters) - Prompt wholesale British gas prices fell on Friday as healthy liquefied natural gas supply weighed on prices, while curve prices rose on uncertainty over long-term supply in aftermath of the Japan nuclear crisis.
Gas for Monday fell to 58 pence per therm, down about 1.50 pence from day-ahead trades on Thursday, with warmer weather and large gas inputs from LNG terminals boosting short term supply.
But prices for next winter and beyond rose on expectations that Japan will gobble up more of the internationally traded fuel when Britain needs it most.
The price of gas for next winter rose above 72.00 pence, compared with Thursday’s close of 71.80 pence, before falling to 71.90 pence, while summer 2012 rose half a penny to 65.30 pence, and Winter 2012/13 firmed 0.75 pence to 72.50 pence.
“Banks are buying the back, thinking winter will be tighter with LNG diverted to Japan,” one European gas analyst at a utility said, adding that a German government meeting to discuss the future of nuclear power in Europe’s largest economy was supporting UK gas price in the far future.
“Merkel is meeting on nukes today. You can buy gas speculatively on it.”
German politicians called on energy companies on Friday to invest massively in non-nuclear power plants — including gas and coal — which could increase competition for the two fuels that generate most of Britain’s electricity. [ID:nLDE73E0DA]
Germany currently has few gas plants, however, they are quick to build and increased German fears about nuclear power since a tsunami smashed into a Japanese plant on March 11 could increase gas demand within a few years.
Another market analyst said the rise in curve contracts followed over a week of heavy falls in which the front winter gas contract has dropped more than 5 percent since April 5.
“We have seen some heavy selling action reflecting the softer oil market over the week,” Nick Campbell of consultants Inenco said.
Brent crude oil prices have fallen nearly 4 percent since early Monday LCOc1, helping take some upward pressure from oil-indexed European gas contracts off the UK gas curve. However, fears Japan’s need to import gas to make up for its lost nuclear generation have kept some upward pressure on prices.
In the short term, Britain remains well supplied with LNG, albeit less so than in the last few weeks.
Prices for front-month May rose on Thursday as the list of LNG tankers heading to Britain shrank, but a few more emerged overnight, helping trim half a penny off May contracts which fell to 58.8 pence ($9.62 per mmBtu). [LNG/TKUK]
The UK power market followed a similar pattern, with curve prices rising and nearer term prices falling. May baseload fell 15 pence to 51.70 pounds while around the clock electricity for Monday eased to 51.10 pounds per megawatt hour, according to one broker. (Reporting by Daniel Fineren; Editing by Alison Birrane)