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British wholesale gas exceeds 3 pounds/therm for first time

CommoditiesOct 06, 2021 17:51
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2/2 © Reuters. FILE PHOTO: A closed Esso gas station is pictured in south London, Britain, October 5, 2021. REUTERS/Hannah McKay 2/2

By Nina Chestney and Nora Buli

LONDON (Reuters) -British wholesale gas for day-ahead delivery breached 3 pounds/therm for the first time on Wednesday morning amid an extended global energy market rally.

The British day-ahead contract rose by 0.41 pounds, or 14.7%, to a new all-time high of 3.20 pounds/therm by 0807 GMT.

Both British and Dutch wholesale gas prices have experienced fresh surges this week due to low gas stocks, lower supply from Russia, colder temperatures, lower wind output and lower generation from some French nuclear plants due to a strike.

Dutch wholesale gas at the TTF hub broke the 100 euro level yesterday and the front-month contract is now trading at around 138.60 euros per megawatt hour.

"Low gas inventories across the globe as winter approaches have been pushing up demand in the physical market whilst supplies have been slower to respond," said analysts at ING.

But European energy commissioner Kadri Simson said on Wednesday that EU countries have enough gas in storage to last through winter, and the surge in prices shows the need to quickly switch to renewable sources and reform the EU gas market. [nL8N2R21HX]

"Gas underground storage is above 75% across Europe. This level is lower than the ten-year average, but adequate to cover the winter season needs," she told the European Parliament.

Simson plans to present a plan to overhaul the gas market by the end of the year.

In wider energy markets, prices are also rallying.

Oil hit a multi-year high on Wednesday above $83 a barrel, supported by OPEC+'s refusal to ramp up production more rapidly against a backdrop of concern about tight energy supply globally. [O/R]

European power and coal prices are also at multi-year or record highs.

Regional natural gas markets in the United States are seeing prices for this winter surge and Asian liquefied natural gas (LNG) prices are at record highs on sustained demand from China amid a power crunch and competition with Europe for LNG cargoes.

"We are currently living exceptional circumstances because the world gas market has never been in a situation where Asia and Europe were obliged to compete fiercely for the marginal LNG cargo available (as the latter was supposed to benefit from comfortable pipeline supply)," said analysts at Engie EnergyScan.

British wholesale gas exceeds 3 pounds/therm for first time
 

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Comments (6)
Zen Cat
ZenCat Oct 06, 2021 18:01
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Good thing I have a bucket of lighters from the days I was still smoking. I can cook food by lighting a bunch of them under my pan, not that gas isnt going to be affordable any more.
Len Smith
Len Smith Oct 06, 2021 11:38
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Brexit blues.
Theo Marshall
Theo Marshall Oct 06, 2021 11:22
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Why aren't we building more biogas plants to meet demand?
Jonathan So
Jonathan So Oct 06, 2021 11:12
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November 2005 natural gas spiked at $15.63, so way higher than todays prices !
Graham Kinnear
Graham Kinnear Oct 06, 2021 11:12
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No surprise there as there is little by way of reserve capacity. Advisers told successive governments that it wasn't needed. That was until Covid-19 arrived and the policy of Net Zero Carbon. Now we have the law of unintended consequence fully in play...
Pedro Gonzalez
Pedro Gonzalez Oct 06, 2021 11:05
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exceptional and going to very inflationary
 
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