LONDON, Feb 6 — UK spot gas prices rose to their highest levels since early 2006 today morning as extreme cold continued to sweep across Britain and most parts of Europe.

Bitterly cold weather throughout Europe has left large parts of the continent struggling to cover gas and power demand, while forecasters warn that low temperatures would continue into next week.

Gas prices for within-day delivery were trading at 79 pence per therm 0815 GMT, and prices for delivery tomorrow were at 78.50, up around 4 pence since Friday afternoon.   

The increases mean that day-ahead gas prices were at levels not seen since early 2006, when prices spiked after Russia cut off all gas supplies to Ukraine and an explosion rocked the UK’s Rough storage gas platform. Prices have shot up some 50 per cent since the beginning of the cold spell.

It also surpasses the spike in January 2009, when Russia cut gas supplies to Europe through Ukraine for two weeks.

Traders said the main reason for the price spike was concern that a glitch in Norwegian flows could cause serious disruptions in the UK.

Unlike flows from Russia, which last week had to reduce exports to Europe in order to cover its own rocketing domestic gas demand,  Norwegian gas flows have held up since the beginning of the cold snap.

The ongoing cold weather means the UK gas system was short of supply today, despite healthy Norwegian flows.

Daily demand was forecast at 396.6 million cubic metres (mcm), 68mcm above the seasonal norm, according to National Grid data.

With expected supplies of 383.2 mcm, the system was 13.4 mcm short, implying the need for more withdrawals from gas storage.

UK storage sites were 65.33 per cent full yesterday, down from around 75 per cent at the beginning of the year but still some 5 per cent above the European average, according to Gas Infrastructure Europe.

Send-outs from British gas storage sites were just under 110mcm today, according to Point Carbon, down from a peak of 130mcm last week but up from around 60mcm at the end of January.

At 59.75 pounds per megawatt-hour (MWh), UK spot power prices were also high, reaching levels last seen in winter 2010.

The UK’s Met Office kept its Level 3 Cold Weather Alarm in place, saying, “There is a 100 per cent probability of severe cold weather and icy conditions between 1000 (GMT) yesterday and 1000 on Thursday in parts of England.”

Meteoalarm, a European weather warning system, kept weather warnings in place for large parts of Europe. — Reuters