U.K. gas surges to highest since 2014 as snow takes over London

A weekend of snowfall has brought an early Christmas for U.K. natural gas bulls.

Same-day prices surged to their highest level in almost four years as demand jumped with a plunge in temperatures after snow covered much of the country over the weekend. The contract soared as much as 13 percent, the most since June, as forecasters predict more snow and colder-than-usual weather while outages curbed supplies to some terminals.

The average temperature in the U.K. for the rest of Monday will be 1 degree Celsius (34 Fahrenheit), compared with a 10-year average of 5.2 Celsius, according to Bloomberg’s weather model. Supplies in the system could plunge 11 percent by the end of the day, according to network manager National Grid Plc.

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“Whilst the weather-related heating demand was expected, the reduction in flows via a number of terminals was not,” Nick Campbell, an energy risk manager at Inspired Energy Plc, said by email. “Therefore this has left the system tight and battling to pull in more gas from the continent.”

The U.K.’s Met Office issued a ‘yellow’ warning, flagging the risk of accidents from the ice after dumps of snow over the weekend disrupted travel. Still, the impact was expected to be “much less widespread and less significant than across parts of England and Wales on Sunday,” according to its website.

Supplies from the Bacton terminal in Norfolk are below the 10-day average after Total SA said exports from the Elgin Franklin field that feed it have been reduced by about 60 percent from normal levels, potentially until Wednesday evening. Flows into the St. Fergus terminal in Scotland also plunged. Storage supply picked up some of the slack, rising to the highest since Dec. 1.

Within-day prices jumped as high as 65 pence a therm ($8.69 per million British thermal units), before trading at 62.25 pence at 10:12 a.m. in London, according to broker data compiled by Bloomberg. The day-ahead contract rose as much as 7.4 percent.