UK vulnerable to winter price spikes

Gas markets in Europe are bracing for the northern hemisphere winter, and as usual the UK is looking vulnerable. Although spot and futures prices have come down in recent days, NBP futures are still 2-3 p/th higher than they were a year earlier.

After last year’s unusually extended heating season, France and Germany have still not been able to fill their storage sites to levels that inspire confidence there will be sufficient gas to cover the coming winter. The late cold snaps in northern Europe in March and April this year had the dual effect of extending the withdrawals from storage beyond the norm, but also shortening the injection period during the spring and summer. Germany and France now look set to enter the winter of 2013/2014 with less gas in store than over the previous two winters, and less as a percentage of capacity than the five year average.