Winter gas up on supply fears Reuters, Tue Jan 3, 2006 4:03 PM GMT
LONDON (Reuters) - Winter gas prices rose on Tuesday on fears about tight supply in severe weather and lingering concerns about the impact of Russia's gas dispute with Ukraine which hit Russian gas exports to Europe.
The February contract was up 3.75 pence at 86 pence a therm, off an early high of 90 pence.
Barclays Capital said the row between Moscow and Kiev was unlikely to have a major impact on prices.
"There is unlikely to be any significant short-term impact since European gas prices are mostly indexed to the price of oil, usually with a six-month time lag," Barclays Capital said in its weekly energy report.
"Even in the UK, market prices for natural gas are up only a few pence since last week, still almost 20 percent below their November peak."
Russia was restoring full gas deliveries to European states on Tuesday after bowing to Western pressure and agreeing on Monday to resume pumping close to normal levels.
Russian gas monopoly Gazprom cut its feed to Ukraine on Sunday in a dispute over prices, leading to supply cuts to countries from Serbia to Germany.
"UK prices would have rocketed if the Russian gas dispute had happened on a normal trading day as there were fears that continental utilities would have to reduce their exports to Britain," one trader said.
Britain imports a small amount of gas from Russia. Gazprom plans to raise its exports to supply about 10 percent of the UK's gas needs by 2010 and fill the gap as North Sea output dwindles.
UK prices were also boosted on Tuesday by a jump in prices as high as 1.50 pence during a chilly spell between Christmas and New Year which underlined worries about a potential gas shortage this winter.
North Sea gas output is falling fast and supply this winter will be the tightest in memory.
Prices in the Netherlands, the main trading market on the continent, held broadly steady although traders were keeping a close eye on prices in the UK.
Within day gas fell to 71 pence, down four pence on last week's forward price for Tuesday. Day ahead gained a penny to 76 pence.
Market Data 
Markets 
AI
