U.K. Winter Natural Gas Declines as Brent Crude Oil Slumps

U.K. natural gas fell to its lowest in almost a month as the price of Brent crude slumped by the most in more than two years.

Gas for next winter, the six months from October, fell as much as 1.6 pence, or 2.25 percent, to 69.5 pence a therm. That’s the lowest since March 11. It was at 69.6 pence as of 4:30 p.m. in London, according to broker prices compiled by Bloomberg. That’s equal to $11.43 a million Btu.

The contract rose to its highest in more than two years last month amid speculation the earthquake and tsunami in Japan would boost gas demand in the country and draw shipments of liquefied gas away from the Britain. Gas had already been pushed higher by a halt in gas flows to Italy from Libya.

Oil plunged as the dollar surged against the euro, after the European Central Bank indicated it won’t raise interest rates soon. Brent oil for June fell as much as $8.63, or 7.1 percent, to $112.55 a barrel on the ICE Future Europe Exchange in London.

Lower oil costs push down some mainland European gas contracts and affect prices in the U.K. because of pipeline connections to Europe. European Central Bank President Jean- Claude Trichet said today the bank will monitor inflation risks “very closely,” suggesting it may wait until after June to raise rates again.

Pipeline deliveries from the Netherlands to the U.K. jumped in the afternoon, boosting supply, National Grid Plc data show.

BP Plc resolved a fault at its Dimlington natural-gas terminal in northeast England, Matt Taylor, a company spokesman in Aberdeen, Scotland, said by telephone.

“We are in the process of restarting,” he said. Flows hadn’t resumed by 5 p.m., grid data show.

Demand Below Average

Gas for June fell 0.95 pence, or 1.7 percent, to 55.4 pence a therm, reversing gains of as much as 0.6 percent.

National Grid forecast gas demand at 277 million cubic meters in the 24 hours through 6 a.m. London time tomorrow. That’s 5 million less than normal for the time of year. Pipelines in the country will contain 337 million cubic meters of gas at that time, 2 million less than at the start of today.

Same-day gas slipped 2.25 pence to 53.75 pence a therm. Gas for tomorrow was at 53 pence at 4:30 p.m. today.

U.K. baseload power for tomorrow fell 50 pence, or 1 percent, to 49.80 pounds a megawatt-hour, broker data show. National Grid predicts peak power use to decline 3.1 percent to 40,050 megawatts tomorrow as businesses curb operations before the weekend.

Power for next month fell 40 pence to 50.55 pounds a megawatt-hour. Baseload is delivered around the clock.

(Source: http://www.bloomberg.com/news/2011-05-05/u-k-gas-for-june-rises-on-lack-of-storage-flows-field-outage.html)