* Gas soars, coal trails
* March DES ARA trades at $101.50/T
LONDON Feb 3 (Reuters) – Freezing weather across much
of Europe pushed prompt gas prices to the highest level for over
three years as demand soared and Russia reduced gas shipments to
Europe but coal prices tracked gas’s move up on a much smaller
scale.
“Gas has rocketed up for the prompt months on the cold
weather snap, tighter supply but coal hardly moved in response,
little more than 30 cents,” one European trader said.
Utilities were active in the swaps and futures markets
across the energy spectrum on Friday to adjust their positions
in line with the moves in gas, power and stable coal prices but
there has been no noticeable rise in end-user buying.
Stockpiles in Europe at the main import terminals and at
power plants remain fairly high and will take a few weeks of
severe weather to be reduced enough to trigger fresh buying,
utility sources said.
The current contango in coal prices “has been caused by warm
weather and ample near-term supply (including inventories),
depressing the front end – as against continued longer term
hedging of dark spreads by utilities – supporting the back end,”
Credit Suisse said in a research note on Friday.
In 2012, the forward curve is expected to flatten somewhat
but a front-end price collapse is unlikely, Credit Suisse said.
Continued…
