`Arctic Intrusion' Through March Brings Havoc to Energy Prices

(Bloomberg) -- Europe faces a second blast of cold air that will linger deep into March just as it gets over a deadly front from Siberia that's causing chaos from Britain to Italy. 

Energy prices surged in advance of the second wave of cold air that's set to keep temperatures in northern Europe abnormally low through the middle of the month. U.K. gas prices have already doubled to the highest in more than a decade in this week's big freeze, which dropped heavy snow, halted traffic and disrupted flights across the region.

An “Arctic intrusion” into Europe will prevent warmer air moving north at least until the middle of this month, said Jason Nicholls, senior meteorologist at Accuweather Inc. All six forecasters surveyed by Bloomberg News say that the first half of March will be colder than normal. The chill will be felt in particular for the U.K., Scandinavia and the Baltic region.

While the conditions in the next few weeks will be less severe than the icy weather already past, temperatures are expected to drop as much as 3 degrees Celsius (5.4 degrees Fahrenheit) below normal, according to Accuweather Inc. Two forecasters predict the cold weather will last until April.

Gas and power prices “will be susceptible to large volatility in conjunction with future cold spells over northern Europe and parts of central Europe,” said Giacomo Masato, a meteorologist at Marex Spectron in London. “While demand becomes less important into spring, we should not forget we are coming from a cold February.”

The freezing weather reached from Moscow to southern Europe and is already testing energy networks and infrastructure. February was one of the coolest for 10 years, prompting traders to withdraw gas from European storage facilities at the fastest rate in at least a decade. Should the chill linger, stockpiling for next winter may be delayed.

To read more about the cold in February click here

With less gas storage than previous years, Britain's energy supply is susceptible to prolonged cold snaps, said Oliver Burdett, commercial director at Enappsys, an energy trading consultant in Stockton-on-Tees, England. Price rises are starting from a high base after the increases caused by the cold front from Siberia, he said.

Temperatures in the north of the region could be “dangerously low,” falling as much as 10 degrees Celsius below normal at the start of March, said Joe D'Aleo, chief meteorologist at WeatherBell Analytics LLC. He sees more “disruptive” snow in the U.K. before the weather warms.

Some Other Views:

• “While the U.K. and Scandinavia stays on the cool side of normal well into March the extreme cold will ease over the next few days”: Nicholls at Accuweather
• Temperatures are expected to be below normal throughout March and into the start of April. From mid-month onwards drivers for colder conditions will be “reinforced”: David Reynolds, senior meteorologist at The Weather Co.

--With assistance from Anna Shiryaevskaya

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson

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