Freezing temperatures have sent UK power prices to record highs, with the surge in demand created by the wintry weather accompanied by very still conditions which led to a lack of wind power.

This meant higher demand for gas for power generation at the same time as households and businesses were turning up the thermostats.

At one stage on 12 December grid operator National Grid (NG.) asked Drax (DRX) to put two coal plants on standby to generate electricity – though in the end they were stood down.

And while the price of UK natural gas futures hit two-month highs, robust supplies from Norway, imports of liquefied natural gas and high nuclear output helped keep a lid on prices for now.

Thanks to limited storage capacity and relatively limited domestic gas production, Europe and the UK were always at risk of moving from a position of feast to famine in terms of gas supplies despite a glut building up during a mild autumn.

Investors can gain exposure to global natural gas prices through exchange-traded product Wisdomtree Natural Gas (NGSP). This tracks the Bloomberg Natural Gas Subindex which is comprised of a basket of natural gas futures contracts.

‹ Previous2022-12-15Next ›