British wholesale gas prices could fall further following a price collapse over the past two weeks and this is certain to add to pressure on utilities to cut household fuel bills. Analysts said wholesale day-ahead contracts might fall by another 5-10 percent to around 30 pence per therm after losing about 40 percent since early February as Britain’s unusually long cold spell came to an end. Recession has eroded energy demand, while more liquefied natural gas (LNG) cargoes are expected to arrive in the country and most nuclear power plants are back in operation after closures to relieve gas-fired generators.

“The outlook for summer is fairly weak at the moment because the supply/demand situation is pretty comfortable,” said Niall Trimble, director of the Energy Contract Company, a consulting firm. “It probably would tend to increase pressure on the big six (utilities companies) to reduce their domestic gas prices. Only two of them have actually reduced their prices at all.”

Analysts agreed day-ahead contract prices might fall in the near future towards 30 pence per therm, roughly the equivalent of oil-indexed natural gas prices in Continental Europe.

Adding to downward price pressure, many LNG cargoes have arrived in UK’s Isle of Grain terminal this winter because of weak demand in Asia and the United States. South Hook, another major LNG terminal, is also to open in the second quarter.

“We always thought LNG cargoes would not come here during the summer. But it’s a question of relative prices,” said Trimble. “Prices are also very low in the United States at the moment. There might be still more to come.”

Since the start of October, 18 LNG cargoes have made it to Isle of Grain, compared with 10 in the same period a year ago.

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