British wholesale gas exceeds 3 pounds / therm for the first time

LONDON, October 6 (Reuters) – UK wholesale gas for overnight delivery exceeded 3 pounds / therm for the first time on Wednesday morning as part of a prolonged rally in the global energy market.

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

UK and Dutch wholesale gas prices saw further increases this week due to low gas inventories, lower supply from Russia, colder temperatures, lower wind generation and the drop in production at certain French nuclear power plants due to a strike.

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

“Low gas inventories around the world heading into winter have pushed up demand in the physical market while supplies have been slower to respond,” ING analysts said.

But EU Energy Commissioner Kadri Simson said on Wednesday that EU countries have enough gas in stock to get through the winter, and the price spike shows the need to quickly switch to renewables and reform the EU gas market. [nL8N2R21HX]

“Underground gas storage is over 75% across Europe. This level is below the ten-year average, but sufficient to cover the needs of the winter season,” she told the European Parliament.

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

In the broader energy markets, prices are also on the rise.

Oil hit a multi-year high above $ 83 a barrel on Wednesday, supported by OPEC + ‘s refusal to ramp up production any faster amid concerns over global energy supplies.

European electricity and coal prices are also at record or multi-year levels.

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

“We are currently living in exceptional circumstances because the world gas market has never been in a situation where Asia and Europe have been forced to compete fiercely for the marginal cargo of LNG available (because the latter was expected to enjoy a comfortable pipeline supply), ”analysts said. at Engie EnergyScan.

Reporting by Nina Chestney and Nora Buli

Our standards: Thomson Reuters Trust Principles.

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