Britain’s natural gas advanced its longest rally since 2011 as violence in Ukraine escalated, worsening a problem that may obstruct supplies from Russia to Europe.
Front-month gas in Britain, which is a European measure, added as much as 3.2%, hitting its highest since March 27.
A Russia-convened meeting of the United Nations Security Council is due after supporters of the Russian agenda in Ukraine clashed with Ukrainian security forces in eastern parts of the country. Russia and the US are attributing the unrest in Ukraine to each other’s actions.
Gas futures rose after soaring last week to the highest level since September 2011, when Russian President Vladimir Putin said he would stop gas exports to Ukraine over outstanding payment. Price wrangles between Russia and Ukraine, which accounts for about 15% of the fuel’s consumption in the entire Europe, stood in the way of shipments to the continent in 2006 and 2009 amid extremely cold weather, according to Bloomberg.
“There is a real risk of a potential disruption in Russian gas shipments to Ukraine, following the Putin letter threatening a cut off if Ukraine’s arrears are not paid promptly,” said analyst Andrew Neff of Moscow-based HIS Inc, by email on Monday.
He added that, while a halt or reduction of supplies to Ukraine would in theory have no impact on gas shipments via Ukraine, in practice Europe has experienced it before and the price wars in 2006 and 2009 were a cause for concern throughout the continent.
Front-month gas soared as much as 53.75 pence for every therm or 9 US dollars for one million British thermal units.
As Platts reports, UK gas for immediate delivery also rose in the morning, with contracts for delivery the day ahead going up 0.30 pence per therm to trade at 52.35 pence per therm.
The within-day contract reversed back to 51.75 pence per therm on oversupply in the morning. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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