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U.K. Gas Rises to 21-Month High After Snow Forecast; Power Gains

Nov. 22 (Bloomberg) -- U.K. natural gas for next month jumped to a 21-month high after forecasters predicted December would be cooler than average and there would be snow this week, boosting heating use. Next-day power rose to a four-month high.

The U.K. and western Europe will be cooler than usual in December, according to forecaster WSI Corp. “We expect another winter with below-normal temperatures across the U.K. and the western half of the mainland, although not nearly as severe as last winter,” WSI Chief Meteorologist Todd Crawford said in an e-mail. “We expect the coldest weather to be in December.”

Gas for next month rose 3.45 pence, or 7 percent, to 53 pence a therm as of 5 p.m in London, its highest level since February 2009, according to broker data compiled by Bloomberg. That’s equal to $8.45 a million British thermal units.

Large parts of Europe including Britain, Scandinavia, Germany and France will be affected by snowfall later this week, Jim Dale, a senior meteorologist at British Weather Services in High Wycombe, England, said by e-mail.

Temperatures in London may fall below zero degrees Celsius (32 Fahrenheit) on Nov. 24 and sink to as low as minus 5 degrees on Nov. 29, according to CustomWeather Inc. data on Bloomberg. In Britain, snowfall will be predominant in the eastern areas, Dale said. More than half of Britain’s homes and businesses are heated by natural gas.

The cold weather “will represent the first test of the gas and power networks at a time of system stress,” Craig Lowrey, an Ipswich, England-based consultant at J.C. Rathbone Associates Ltd., said in an e-mail. The U.K. market should be able to adequately deal with the increased demand although exports to Europe may be a key factor, he said.

Increased Demand

National Grid Plc forecast demand will be at 350 million cubic meters in the 24 hours through 6 a.m. tomorrow, 12 million more than normal for the time of year. The nation’s pipelines will hold 340 million cubic meters of gas at that time, about the same as at the start of today.

Gas for delivery today gained 3.8 pence, or 7.6 percent, to 53.9 pence a therm. A therm is equal to 100,000 Btus. About half of Britain’s power supplies can come for gas-fed plants and so the price of the fuel influences electricity markets.

U.K. baseload power for tomorrow gained 50 pence to 47 pounds a megawatt-hour, according to broker data. National Grid predicts energy use today will peak at 54,649 megawatts. That’s 0.8 percent higher than it forecast on Nov. 19.

Intergen’s 780-megawatt Coryton natural-gas fueled power station in Essex, southeast England, halted on Nov. 19, according to National Grid data. That’s the first time it’s stopped since March, data on Bloomberg show.

Electricity for December advanced 2.25 pounds, or 5 percent, to 47.35 pounds a megawatt hour. Baseload is delivered around the clock.

To contact the reporters on this story: Catherine Airlie at cairlie@bloomberg.net.

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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