(Bloomberg) -- Traders in Europe’s two biggest natural gas markets were scrambling for fuel on Wednesday, sending prices soaring as freezing weather exposed supply issues.
U.K. and Dutch gas for same-day delivery more than doubled to attract extra supply needed for heating. With Britain increasingly reliant on the rest of Europe for its fuel as it closes its biggest storage facility and the Dutch curbing production from the region’s biggest field to prevent earthquakes, unplanned outages added to the woes.
Within-day prices in the U.K. reached as high as 190 pence a therm ($26.26 a million British thermal units), almost four times their average over the past year. Those in the Netherlands reached as much as $34 a million btu, with hourly prices even soaring to almost 10 times that as the network manager struggled to keep the grid balanced.
Pricing reached “extremes,” said John Twomey, a power and gas analyst at Bloomberg New Energy Finance in London. “The U.K. is being outcompeted by other markets on the continent that are also undergoing stress.”
Significant unplanned outages added to the mix. Norway, Europe’s biggest supplier after Russia, curbed exports after an outage at a processing plant. The only pipeline from the Netherlands to the U.K. halted after a snow storm caused an unspecified technical problem, leaving just an interconnector with Belgium between Britain and mainland European markets.
A more favorable weather forecast did little to damp prices. On Friday, even colder weather had been forecast for this week, which would likely have boosted consumption further.
In future, gas supply could get even more complicated as energy trading is a political flashpoint in Brexit negotiations. It’s still unclear what rules will govern shipments after the U.K. leaves the bloc.
Liquefied natural gas will help fill gaps in future, especially in the U.K., as will shipments from Russia and Norway, he said. Wednesday’s situation is being made worse because of the limits on flows from Norway.
“There’s a bit of panic around,” said Murray Douglas, research director for Europe gas at Wood Mackenzie Ltd., which advises companies on energy. “When one, two or three things go out at the same time, you run into problems.”
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