The price of gas for September delivery was 31.95p/th in August, using the average of Platts' daily forward-month market assessments, down 2.4% on August's value as the forward month in July, Platts' records show. This was 45% more expensive than the same period last year. The volume-weighted average price of the 3-mil therms/day sold in a total 93 trades reported to Platts comes out fractionally higher, at 32.0086p/th.

The increase for August despite the weather reflects the high level of offshore maintenance which saw traders paying up in advance for August but not for September, when the end of the gas year sees some take-or-pay positions being squared off, and very little scheduled maintenance going on. Centrica's Morecambe South gas field was off for the month, although as a partial counterbalance injections into storage at Rough were halved mid-month when a compressor was stopped. Armada, J-Block and Britannia were also expected off some of the time.

Day-ahead was also higher in August, by some 7%, at 31.04p/th, as the on-the-day commodity market saw within-day rise above 40p/th on occasion as the outages hit, even on a hot bank holiday weekend. The big movements in the NBP prompt market saw the Interconnector switch flow direction a record number of times for one month.

The curve was also softer in August than it had been in July. Q4 '05 was 8.5% cheaper, at 54.87p/th, although that was 64% more expensive than it had been a year ago. And the gas year, starting in October, was 54.73p/th, 3.6% cheaper than in July, although still a massive 74% more expensive than it was the same time last year. The fall in the second week of the month coincided unusually with record nominal oil prices, and followed news that the Interconnector expansion, doubling its capacity to ship gas to the UK, would be ready in November a month earlier than expected.

But Hurricane Katrina's impact on gas production in the US and on refinery capacity in some southern states contributed to record high Nymex gas prices and also to record-breaking US crude prices--again. Front-month Nymex gas (October) reached $11.69/mmBtu, making it more expensive that day than any monthly UK contract until the end of December, with possible implications for deliveries of liquefied natural gas in the fourth quarter. On the last day of the month the rising market saw the gas year get above the average over the month.

And demand for capacity in the Interconnector in the winter also dropped, shown by a shrinking difference between UK and Zeebrugge prices. The difference for winter '05 started the month at 16p/th and ended at 5p/th. The UK price for the winter fell for most of the month while the price for Zeebrugge rose.

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Updated: September 20, 2005

This commentary was sourced from Platts European Natural Gas Report. Every business day, Platts European Natural Gas Report brings you the latest news, price assessments and market commentary from the European gas markets. A subscription guarantees topical, clear and precise information on price changes and their effects on the industry – a crucial advantage in a competitive industry. Request a free trial now.