Gas price rises as freezing weather bites across Europe

image captionThe cold weather has seen gas demand soar across Europe

The price of gas around Europe has risen sharply due to increased demand as a result of the cold weather.

UK gas for next day delivery reached 93 pence per therm, the highest for more than six years.

It marks a rise of 24% in the UK price since Friday.

In addition, Italy has decided to ration the supply of gas to industrial customers after receiving insufficient gas from Russia to meet high levels of demand.

Prices have soared even higher in France, which is struggling to meet demand, reaching the equivalent of almost £1.02 per therm.

Companies supplying residential customers rarely buy gas on the next day market. But it is relied upon by some big commercial users.

Jeremy Nicholson, of the UK Energy Intensive Users Group said: "This is a pretty savage price hike for large-scale users of gas.

"A very large proportion of major industrial gas users pay for their supply on a next-day basis, so these price hikes will filter through much more quickly to them.

"I understand the current US price is around 15p per therm for gas, and it is a market which has an oversupply of shale gas, unlike the UK, so perhaps there are lessons to be learned here."

More than 200 people across Europe have died because of the cold weather.

Ukraine's government has said that its country's death toll is at least 130.

"Although UK demand is still well below the record set in 2010, the price increases have to be seen in the context of very high simultaneous demand across all of Europe and Russia," said Edward Cox of energy experts ICIS Heren.

Supply issues

There have also been concerns in recent days about gas supplies from Russia after state-owned energy firm Gazprom lowered supply for a few days last week.

The European Commission has sought to reassure member states that gas flows from Russia have returned to normal levels in six European countries after recent unprecedented demand.

Supplies are back to normal in Austria, Bulgaria, Greece, Hungary, Poland and Slovakia, said the European Commission's spokeswoman for energy, Marlene Holzner.

But Italy's main energy supplier, Eni, will begin shutting off supply to industrial clients with interruptible contracts from Tuesday.

The move, which is used by suppliers as a way of controlling demand, was decided at a meeting of Italy's gas emergency committee.

Some businesses sign up to interruptible contracts because they offer cheaper supply in return for an agreement that gas can be cut off temporarily without warning.

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