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Spot UK wholesale gas prices on Monday reached the highest level of the
year as the key Day-ahead contract traded at 51.50 pence per therm. This is above peak January prices when demand was more than double current levels.

UK wholesale prices have been rising in the past month because of high demand for UK gas to be exported to Continental Europe and a reduction in send out of liquefied natural gas (LNG) from UK terminals.In the past week, a drop in Norwegian imports and UK system maintenance has put further pressure on the UK supply system and spot prices have risen as a result.

The Day-ahead price for the summer to date has averaged 39.30 pence per therm. Last winter, the Day-ahead contract averaged 31.74 pence per therm. The price for the coming winter reached 57.15 pence per therm on Monday, compared with 45 pence per therm in mid January.

"Although the UK spot price has reached a year high, it is below levels
on the Continent. This is maintaining interest in UK gas exports, which is
one of the main bullish price drivers. UK prices could rise further if the
current combination of high exports, lower Norwegian imports and lower LNG flows continues," said Edward Cox, Editor of European Spot Gas Markets at ICIS Heren.

The UK is becoming more dependent on gas imports as North Sea reserves decline. Recent government data showed the UK was a net importer of gas in the first quarter of 2010 for the first time since 1968.In the first quarter, around 25% of UK gas was sourced from LNG imports. Norway also typically provides around 25% of the UK's gas supply through two main pipeline connections.The UK increasingly has to compete for gas on a European and global-wide basis. (ICIS)