Gas prices surge to record highs: 2 energy stocks to buy

Highlights 

• Gas prices rose to record highs on Tuesday amid renewed fears between Russia and Western leaders.
• The UK Energy Research Council called for a review of the UK’s energy security policy.
• UK’s gas prices touched a new record closing price of 322.5 pence per therm on 14 December.

Gas prices rose to record highs on Tuesday amid brewing tension between Russia and Western leaders over Ukraine.

Fears that worsening relations between Russia and western leaders could restrict gas supply triggered the price rise. Russia is among one of the biggest natural gas suppliers in Europe.

UK’s gas prices touched a new record closing price of 322.5 pence per therm on 14 December, according to data from market information provider ICIS.

Tuesday’s prices beat the earlier gas price record reached in October 2021. The previous high reached in October stood at a little higher than 298 pence per therm.

Similarly, Europe’s gas prices also reached a new record peak. Natural gas prices in the Netherlands’ benchmark market jumped to EUR 127.45 per MWh, crossing its earlier record of EUR 116.75 per MWh, according to ICIS data.

Meanwhile, a UK based academic group, the UK Energy Research Council, called for a review of the UK’s energy security policy, cautioning the government had been complacent regarding natural gas supply for a long period.

In view of this, let us take a look at 2 FTSE listed energy stocks and their investment prospects:

1. Centrica PLC (LON: CNA)

Centrica is a UK based supplier of electricity and gas and is a part of the FTSE 250 index.

The group plans to dispose of its Spirit Energy Norwegian oil and gas assets. The transaction is expected to have a headline consideration of about £800 million, and its commercial effective date will be 1 January 2021.

Centrica holds a 69 per cent share in Spirit, thus its proceeds from the sale are expected to be about £560 million.

Image source: Refinitiv

Centrica’s shares ended at GBX 67.30, higher by 0.45 per cent on 14 December, while the FTSE 250 index closed at 22,550.69, down by 0.43 per cent.

The company’s market cap stood at £3,958.18 million, and its one-year return was at 62.36 per cent as of Tuesday.

2. Yu Group PLC (LON:YU)

AIM listed firm, Yu Group, is a specialist energy and utility solutions supplier to UK companies, providing commercial electricity, gas and other solutions.

The group was appointed as the Supplier of Last Resort (SOLR) by UK’s energy regulator Ofgem for the collapsed energy supplier, Ampower’s electricity and gas customers.

Image source: Refinitiv

Yu’s shares ended at GBX 225.00, down by 2.17 per cent on 14 December, while the FTSE AIM All-Share index closed at 1,164.67, lower by 1.09 per cent.

The company’s market cap stood at £ 36.71 million, and its one-year return was at 125.56 per cent as of Tuesday.