U.K. Gas Rises With Higher Demand, Lower Supply; Power Gains

U.K. natural gas for May rose, snapping two days of losses, as demand increased and supplies were forecast to decline. Power followed gas higher.

National Grid Plc, manager of Britain’s pipeline network, forecast gas demand at 285 million cubic meters in the 24 hours through 6 a.m. London time tomorrow. That’s about 20 million more than yesterday. The nation’s pipeline’s will contain 324 million cubic meters of gas at that time, 21 million less than at the start of today.

Gas for May advanced 1.70 pence, or 3.1 percent, to 56.80 pence a therm as of 10:20 a.m. on the ICE Futures Europe Exchange in London. That’s equal to $9.41 a million British thermal units. A therm is 100,000 Btu.

Baseload power for next month gained 70 pence, or 1.4 percent, at 50.50 pounds a megawatt-hour. Baseload is delivered around the clock.

Same-day gas rose 2.50 pence at 55 pence a therm. Power for the next day gained 0.1 percent to 49.45 pounds a megawatt-hour. Natural gas is used to generate about half of Britain’s electricity and so the fuel price influences power markets.

Goldman Sachs Group Inc. said in a report yesterday that the continuing 30 million cubic meters a day of missing supply from Libya and an increase of 18 million cubic meters a day in liquefied natural gas demand from Japan following the earthquake on March 11 “have the potential to eliminate the supply overhang in the global LNG market, bringing it to balance.”

The bank raised its 2011 price estimate for U.K. gas at the National Balancing Point delivery hub to $10.90 a million btu from $7.80. It forecast a price of $12.40 a million Btu in 2012, up from $8.50.

“Increased demand and the limited ability of LNG suppliers to increase production levels will likely keep global LNG markets more balanced this summer and increasingly tighter, in our view, going forward,” analysts including David Greely said.

Britain is increasingly turning to tanker-borne gas shipments as North Sea production declines.

(Source: http://www.bloomberg.com/news/2011-04-27/u-k-gas-rises-with-higher-demand-lower-supply-power-gains.html)