British gas prices spike above 200 p/therm on fresh supply concerns

By 1056 GMT, the wholesale gas price for winter delivery TRGBNBPSH2 rose 20.2% to 218.40 pence per therm.

This year, benchmark wholesale British gas prices have more than trebled due to several factors including low stock levels, strong demand in Asia making it more difficult to attract LNG cargoes and maintenance issues at key infrastructure and a drop in flows to Europe from key producer Russia.

Record high gas prices and storage stocks well below the five-year average reflect the acutely tight European gas market as we enter winter gas season, Refinitiv gas analysts said.

The so-called “winter gas season” starts on Oct. 1 and continues until the end of March. This is a time when heating demand is usually higher due to colder temperatures.

“For winter 2021, a mild weather alone might not be enough to balance this market. We conclude that additional supply is a key driver for prices to soften this winter,” the analysts said.

A drop in Russian supplies to Europe on Tuesday also added to supply concerns.

Russian supplies via the Yamal-Europe gas pipeline fell by more than half from Monday, the Interfax news agency reported citing data from grid operator Gascade.

Other prices also rose on Monday, with the British day-ahead contract TRGBNBPD1 jumping 4.75 pence to 178.00 p/therm in early morning trade.

The October gas price at the Dutch TTF hub, a European benchmark, TRNLTTFMc1 was up 7.47 euros, or 9.7%, at 84.00 euros per megawatt hours (MWh).

Also supporting prices was cooler average temperatures in Britain which are expected to drop below seasonal normal levels on Tuesday and Wednesday, according to Refinitiv Eikon data, and forecasts of falling temperature across north-west Europe by the end of the week. NG/GB

TAKE A LOOK-Reuters coverage of surging European gas prices

GRAPHIC-On the cusp of Europe’s winter season, gas storage hits 10-yr low

FACTBOX-Europe grapples with surging power and gas prices
Source: Reuters (Reporting by Marwa Rashad in London and Nora Buli in Oslo; Editing by Nina Chestney)