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24 | 9th - 15th May 2014 | UtILIty WEEK Markets & Trading Analysis O ne might expect that saber-rattling from Europe's largest supplier of nat- ural gas would result in panic-buying and a steady price rally. But far from seeing pricing levels surge to record levels in line with increasingly threatening rhetoric from Russia, market players over recent months have been confronted with persistently bear- ish sentiment. Currently, prices for prompt-delivered gas are languishing at the lowest levels seen in almost three years, while gas prices for this winter continue to slide despite shedding almost 14 per cent in value over the first quarter. UK energy traders are unanimous: for now, a healthy supply-demand picture trumps the risk posed by a potential supply disruption from Russia this year. "Prompt gas is currently at 31-month lows, reflecting how healthy storage stocks are aer the exceptionally mild winter we've had," says Icis European gas analyst Tom Marzec-Manser. "In addition to this, we're also seeing a very healthy supply picture. LNG deliver- ies are much more frequent as Asian prices seem to be easing." Market jitters over supply from Norway and the North Sea have also eased because producers have suffered relatively few unplanned outages recently. Scheduled out- ages are now made known to the market well in advance. "People are able to better forecast with a lot more certainty going forward," Marzec- Manser says. Icis, a price reporting agency, produces daily benchmark price references for the wholesale gas market. These show the win- ter value stubbornly above the 70 pence per therm mark late last year. This was driven by strong trading levels over the summer as the UK sought to replenish gas storage, which had been totally depleted over March 2013. By contrast, the most recent winter saw very little need to dip into storage, leaving the UK awash with gas and sending winter gas prices to lows of around 60p/th in April, Icis data shows. Traders say that had the increased geopo- litical tension surrounding Russia's decision to annex Crimea from Ukraine not arisen, prices would have fallen further still. The "risk premium" helping to stem persistent losses could be around 10 per cent, traders say, adding that winter gas might otherwise have fallen to below 60p/th weeks ago. "Even though the molecules which the UK trades and burns aren't really sourced from Siberia, we've seen the NBP [national balancing point] price rise as tensions with Russia increase, and fall back when some Russian crisis: nerves steady The showdown between Russia and Ukraine has sent shockwaves through the chancelleries of Europe and the US, but gas traders have taken it in their stride. Jillian Ambrose finds out why. 75p 70p 65p 60p 55p 50p 45p 40p Pence per therm Source: Icis wINTER 2014 AND DAY-AHEAD GAS PRICES 1/10/13 30/04/14 15/01/14 Winter 2014 Day=ahead