LONDON, December 20, 2010 /PRNewswire/ -- Spot UK wholesale gas prices on Monday jumped above 70 pence per therm - the highest level in over two years - as gas demand hovered close to record high levels.
Ongoing freezing temperatures pushed up demand from local distribution zones, which include residential heating, and meant overall consumption was 33% above normal December levels.
The key Day-ahead wholesale gas contract, the price for gas to be delivered on Tuesday, traded at 71.50 pence per therm on Monday morning, a rise of 6.40 pence per therm from Friday. The last time the contract closed above 70 pence per therm was on 31 October 2008.
Demand reached a record high of 465.80 million cubic metres at 08:03 London time, according to National Grid. But this had fallen to 461.50 million cubic metres by 10:02. National Grid estimates total demand levels for the day on an hourly basis.
Highest ever demand was 465.5 million cubic metres on 8 January 2010. Highest demand this winter to date was 456.6 million cubic metres on 2 December.
Despite the rise in gas consumption, there was a surplus of UK gas as withdrawals from storage sites increased on Monday. Imports through the Interconnector that connects the UK and Belgium were higher, and there was also a rise in supply of liquefied natural gas (LNG).
LNG is gas which is converted into liquid form and can then be transported by ship to any country which has an appropriate receiving terminal.
"The system has coped very well with massive demand levels so far this winter. We have much more flexibility in our supply now and a rise in prices encourages gas to come to the UK" said Edward Cox, Editor of European Spot Gas Markets at ICIS Heren.
National Grid said in a press release it had issued a Gas Balancing Alert on Sunday as Monday's demand was above the current trigger level of 452 million cubic metres.
Milder temperatures are forecast to return later in the week.
UK electricity prices have weathered the storm rather better during this cold snap than in late November, when prices reached a 22-month high. But data from UK market operator Elexon shows that today is expected to be the second highest demand for electricity this winter, at 59,548MW at 17.00 this evening, This is close to the highest demand for this winter so far - the peak was on 7 December at 60,085MW.
A spike in wholesale gas prices also boost the UK electricity market because the UK relies on gas-fuelled power plants, but more of the UK's nuclear units are available to generate this month than last. In the 24 hours to Monday at 11.00, 35% of the UK's electricity generation was provided by gas, with 18% from nuclear power.
Note to editors:
Gas demand data is taken from the National Grid website. Electricity demand data is taken from the Elexon website, the UK power market operator.
On Monday morning, Norwegian imports represented around 20% of UK supply. LNG represented 18% of supply, with storage at 14%. The UK also sources gas from the North Sea and through the Interconnector and BBL pipes that link the UK with continental Europe.
The UK has one long-range storage facility at Rough. On Monday morning, the site had sufficient gas to flow at maximum withdrawals for a further 49 days. This would mean it could be empty by the end of the first week of February.
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SOURCE ICIS Heren