The price of natural gas surged to its highest level for more than eight months yesterday amid growing fears that a cold snap will hit the UK next week.
Gas for delivery on Monday shot up 63 per cent as weather concerns were compounded by worries that maintenance work would hurt supplies. However there was relief for motorists as a fall in oil prices took the cost of petrol closer to 90p a litre.
The Met Office said it expected temperatures to drop significantly next week. "It could fall as much as 10 degrees - and that's significant for gas consumption," a spokesman said. He warned that temperatures could fall from yesterday's average of 12C to 2C and an average of 5C when the cold snap hits on Tuesday.
According to figures from Spectron Group, the gas marketplace, prices of natural gas for delivery on Monday surged 70 per cent to 73.9p a therm from a low on Thursday of 43.5p. It hit £1 in March. Prices were also pushed up by concerns over immediate gas supplies. ConocoPhillips has said its Theddlethorpe terminal will close for up to 48 hours starting today.
Meanwhile Chevron, the US energy giant, has said its Britannia field would produce fuel at a reduced rate for "the next few days" because of a faulty compressor. One trader said: "There is definitely a panic about supplied during the winter because think it might be freezing and the Met Office has fuelled that."
British Gas said customers would not be hit as the major suppliers had set their prices. British Gas, NPower and Scottish and Southern have raised their prices by between 13 and 14 per cent.
A spokesman said the industry's concerns were focused on long-term problems with the gas market. He said that despite higher prices in the UK than continental Europe there was no sign that a cross-Channel pipe was importing gas. Next week the European Commission will unveil the results of an investigation into the market.
Meanwhile, oil prices tumbled to less than $57 a barrel as swelling fuel stocks eased consumer fears of tight winter supplies.Reuse content