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Renewed concern over a potential disruption of Russian gas supply to Europe has bolstered market prices across the UK and continental gas markets.
Europe’s largest gas supplier said on Tuesday that neighboring Ukraine has still not made the pre-payment required to receive more gas, despite having just two days’ worth of supply left.
As a key gas-transit state for Russian gas deliveries Ukraine’s security of supply woes have heightened concern in Europe, lifting prices for gas delivered next month.
UK gas for delivery in March rallied over 4 per cent Wednesday morning to 49.80 pence per therm as a result, with power prices following suit.
Gas for the summer delivery period, which runs from April to September, saw gains of just 2 per cent to 46.20 p/th as traders price in the likelihood of a resolution within that timeframe.
In late 2005 tensions between Russia and Ukraine over gas supply payment reached a crescendo as Russian cut all supply through the country to prevent Ukraine using European deliveries for its domestic needs.
A supply disruption of similar scale is unlikely now due to better pipeline links through Europe but the risk could hold market prices higher, increasing costs for European suppliers.
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