(Bloomberg) -- Natural gas prices in the UK have this month commanded the biggest premium over the European benchmark since the end of 2021, underscoring how the nation without large storage sites is more vulnerable during colder weather.
Futures on the UK’s National Balancing Point hub were little changed on Wednesday, but are still trading near the highest level since last year. Prompt prices added more than 15% so far in November.
UK futures are normally cheaper than the benchmark during summer, but sometimes flip to a premium to gas traded in Amsterdam during winter to attract extra supply. This year, the trend is being amplified by a colder-than-usual start to the season and windless weather earlier this month.
Britain largely depends on flows from its continental shelf, Norway, and liquefied natural gas producers around the world, as it lacks the large storage facilities that are used in mainland Europe.
Forecast demand for gas in the UK on Wednesday jumped to the highest since January and above seasonal norms, grid data show. Temperatures are expected to drop below average until at least the end of this week, increasing heating needs.
As a result, Britain has become the main destination for the diverted LNG cargoes amid higher prices in the region. At least four out of seven vessels that have recently changed course toward Europe are heading to UK ports, according to ship-tracking data compiled by Bloomberg and information provider Kpler.
UK front-month futures were little changed at 114.83 pence a therm. Dutch front-month futures, Europe’s gas benchmark, traded at €45.80 a megawatt-hour at 9:32 a.m. in Amsterdam.
--With assistance from Elena Mazneva.
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