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Our market view - Week 13

Released - Last updated

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UK gas market squeezed by cold weather
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NATURAL GAS

UK spot gas prices are trading more than 70% higher than normal. This means Britain is currently paying some of the world’s highest wholesale gas prices. Britain is suffering winter price spikes while Asia’s sustained high prices reflect the demand from their growing economies and Japan’s need to replace nuclear output.
March NBP gas prices have moved between 69 and 150 pence/therm versus a range of 55-62 last year. Heavy stock draws have left the UK gas market stretched. Storage terminals are now only 8% full. Britain is becoming more reliant on LNG flows, but global supplies remain tight and imports are scarce.
Summer gas prices are being pushed upwards by the need to refill storage sites, lack of LNG supplies and reduced availability of gas due to maintenance. Gas price spikes on the Continent are capped by more gas storage and access to Russian imports. UK summer gas prices.

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OIL

Oil prices rose last week, mainly due to the “settlement” of the financial crisis on Cyprus. Prices are supported by prospects of stronger oil demand in Asia but hurt by concerns over the pace of economic recovery in top consumer the US. With only moderate economic growth, the US is going to struggle to bring down unemployment which is a real drag on the economy.

The OECD warned last week that there will be no meaningful economic recovery in the euro zone for the rest of 2013.
Updated