By Nina Chestney and Nora Buli
LONDON -British wholesale gas for day-ahead delivery breached 3 pounds/therm for the first time on Wednesday morning amid an extended global energy market rally.
The British day-ahead contract rose by 0.41 pounds, or 14.7%, to a new all-time high of 3.20 pounds/therm by 0807 GMT.
Both British and Dutch wholesale gas prices have experienced fresh surges this week due to low gas stocks, lower supply from Russia, colder temperatures, lower wind output and lower generation from some French nuclear plants due to a strike.
Dutch wholesale gas at the TTF hub broke the 100 euro level yesterday and the front-month contract is now trading at around 138.60 euros per megawatt hour.
"Low gas inventories across the globe as winter approaches have been pushing up demand in the physical market whilst supplies have been slower to respond," said analysts at ING.
But European energy commissioner Kadri Simson said on Wednesday that EU countries have enough gas in storage to last through winter, and the surge in prices shows the need to quickly switch to renewable sources and reform the EU gas market. [nL8N2R21HX]
"Gas underground storage is above 75% across Europe. This level is lower than the ten-year average, but adequate to cover the winter season needs," she told the European Parliament.
Simson plans to present a plan to overhaul the gas market by the end of the year.
In wider energy markets, prices are also rallying.
Oil hit a multi-year high on Wednesday above $83 a barrel, supported by OPEC+'s refusal to ramp up production more rapidly against a backdrop of concern about tight energy supply globally. [O/R]
European power and coal prices are also at multi-year or record highs.
Regional natural gas markets in the United States are seeing prices for this winter surge and Asian liquefied natural gas (LNG) prices are at record highs on sustained demand from China amid a power crunch and competition with Europe for LNG cargoes.
"We are currently living exceptional circumstances because the world gas market has never been in a situation where Asia and Europe were obliged to compete fiercely for the marginal LNG cargo available (as the latter was supposed to benefit from comfortable pipeline supply)," said analysts at Engie EnergyScan.