U.K. Gas for Winter Rises to 18-Month High as Brent Crude Gains

March 2 (Bloomberg) -- U.K. natural gas for delivery next winter rose to its highest in 18 months after Brent crude gained amid continued unrest in the Middle East and North Africa. Power climbed on the higher cost of gas.

Gas for winter, the six months from October, rose as much as 1.15 pence, or 1.8 percent, to 66.25 pence a therm, its highest price since Aug. 13, 2009, according to broker prices compiled by Bloomberg. It was at 66.15 pence at 4:45 p.m. in London, equal to $10.79 a million British thermal units.

Summer gas gained as much as 1.55 pence to 56.3 pence.

Libya halted gas exports to Italy on Feb. 22 and more than half the country’s oil production is shut in, according to the International Energy Agency. Italy is importing more Russian gas to make up for the shortfall, Snam Rete Gas SpA data show.

Demonstrations against poverty and autocratic rule have spread to countries including Oman, Algeria and Yemen, increasing uncertainty about future oil and gas production in exporting countries.

Brent oil for April climbed as much as $2.33 cents, or 2 percent, to $117.75 a barrel today on London’s ICE Futures Europe exchange. Higher oil costs push up some mainland European gas contracts and affect prices in the U.K. because of pipeline connections to Europe.

National Grid Plc forecast gas demand at 349 million cubic meters in the 24 hours through 6 a.m. London time tomorrow, about 6 million less than normal for the time of year. The nation’s pipelines will hold 355 million cubic meters of gas at that time, about 5 million more than at the start of today.

Gas for immediate delivery rose 1 pence at 57 pence a therm. Gas for tomorrow was at 56.5 pence at 4:30 p.m. Nearly half of Britain’s electricity can come from natural gas-fed power stations so higher fuel prices can cause some utilities to switch to burning coal.

U.K. baseload power for delivery next winter gained 75 pence to 54.95 pounds a megawatt-hour, its highest level since October 2009. Power for tomorrow rose 35 pence, or 0.7 percent, to 48.75 pounds. Baseload is delivered around the clock.

(Source: http://www.businessweek.com/news/2011-03-02/u-k-gas-for-winter-rises-to-18-month-high-as-brent-crude-gains.html)