UK Business Gas Prices Drop despite Forecasted Cold Spell

British gas prices have dropped on Monday despite the forecasted cold weather, opposite to what happened at the beginning of the month when the first cold spell hit Britain and rocketed UK gas prices.

Backed by a strong supply from Norway and Netherlands plus LNG imports helped keep UK gas prices at lower levels. Gas for delivery today was traded at 61.70 pence per therm at 0918 GMT (Monday), down 0.10 from the previous session, and the balance-of-the-week price fell 0.65 pence to 61.75 pence.

Norwegian and Dutch imports more than 90 million cubic metres (mcm) of gas to the British market, helping meet above-average demand levels. According to National Grid data gas demand is 10% higher than usual for this season.

“It is looking like being very cold again on Saturday but that has been pretty well forecast and planned for,” one British gas trader said.

Strong supply margin forecasts and a high number of LNG tankers expected to arrive in the due course of December also made January gas prices drop 30p to 58.95 pence ($9.31 per mmBtu). But gas and energy brokers are still not very confident about long term gas prices as storage supply could drop later in the winter.

Rough stock levels – Britain’s largest storage site – were 30% lower than a year ago. This could push gas prices up towards the end of the winter.

As expected for this time of the year, energy prices went up slightly as demand increased, despite the prospect of EDF’s Hartlepool 2 nuclear reactor being reconnected to the Grid over the weekend.

Power for day-ahead was traded at 57.00 pounds per megawatt-hour (MWh, registering a 1 pound increase. While power for delivery in January traded at 52.70 pounds per MWh, up 0.60 pounds from Friday’s session.

“I think winter contracts are fundamentally bearish, but no one is brave enough to sell it with gas volatility,” said one energy broker.

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