U.K. Natural Gas Jumps to 1-Year High on Weather, Storage Limits

March 12 (Bloomberg) -- U.K. day-ahead natural gas prices surged to their highest in more than a year as Centrica Plc restricted withdrawals from the nation’s biggest gas store and freezing weather gripped Europe’s biggest market.

Gas for tomorrow jumped as much as 8.3 percent while the within-day contract rose as much as 11 percent. Minimum temperatures in London are forecast to be below freezing in seven of the next 10 days, compared with a 30-year average of 3 degrees Celsius (37 Fahrenheit), CustomWeather Inc. data on Bloomberg show.

Cold weather drove withdrawals of the fuel to a six-day high yesterday, when 4.5 percent the nation’s reserves were removed from stores. Centrica’s Rough storage field in the North Sea, Britain’s largest, limited withdrawal capacity by 25 percent for about six hours through 4:40 p.m. London time. Day-ahead gas has averaged 70 pence a therm in 2013, 17 percent more than in the year-earlier period.

“So far this year, inventories have seen one of the largest draws ever and the premium of U.K. gas prices to other European benchmarks widened sharply in order to attract greater imports from neighboring countries,” Sabine Schels, a commodity strategist at Bank of America Corp. in London, said in a research note e-mailed today and dated yesterday. “The U.K. gas market has yet again been exposed to its deep-rooted supply problems.”

Day-Ahead Jump

The day-ahead contract jumped as much as 7.5 pence to 98 pence a therm, according to broker data compiled by Bloomberg. That’s the highest price since Feb. 8, 2012, and is equivalent to $14.58 per million British thermal units. The price was at 95.75 pence at 5:11 p.m. London time. Within-day gas traded at 94.75 pence after rising 10 pence to 101 pence.

Shipments from Rough had rebounded to 39 million cubic meters a day at 5:15 p.m., after dropping as low as 31 million cubic meters at 1:42 p.m., according to grid data.

Yesterday’s withdrawal from stores including Rough was 258 gigawatt-hours, cutting the level to 5,476 gigawatt-hours, according to data from National Grid Plc, the network manager. At that pace, they will reach the record low set in March 2010 of 2,924 gigawatt-hours in less than 10 days.

April gas rose 0.5 percent to 69.4 pence a therm on ICE Futures Europe, which would be the highest close since Sept. 23, 2011.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net