UK Winter Gas Outlook: Two Question Marks

As much of the U.S. swelters and much of Europe suffers under unusually high temperatures, the analysts at Cambridge Energy Research Associates Inc. (CERA) are wondering whether the U.K. will have an adequate supply of natural gas this winter.

The answer from analysts at the Cambridge, Mass.-based energy advisory firm is a qualified yes. Much, however, will depend upon the readiness of new pipeline capacity and production levels on the UK Continental Shelf.

"A fear of shortages, equipment failures or other unforeseen events and a concern about the quality of supply-and-demand information are holding the forward price for winter natural gas prices higher than the fundamentals of supply and demand should support," observes Simon Blakey, CERA's senior director for European energy. "Nevertheless, in view of what is being built and will be ready for this winter, the balance should be made -- and at lower price levels than were seen in 2005/06."

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