EUROPE GAS-Prices ease as Norwegian supplies ramp up

British and European wholesale gas prices fell for a third straight day on Friday morning as Norwegian gas flows ramped up, alleviating some concerns over tight supplies this winter.

The British day-ahead contract was down 4.00 pence at 166.00 p/therm by 0815 GMT.

The UK October contract was down 2.40 pence at 170.00 pence/therm.

The October gas price at the Dutch TTF hub, a European benchmark, was down 2.59 euros at 68.13 euros per megawatt hours (MWh).

Analysts said prices were being pushed lower by stronger supply from Norway.

Norwegian flows to Europe stood at nearly 318 million cubic metres on Friday morning, up from 289 mcm/day on Thursday, Refinitiv data showed.

In turn, Britain’s gas system opened long, with supply at 173 million cubic metres (mcm) per day and demand at around 140 mcm/day, National Grid data showed.

“On the short end of the curve, increased supply from Norway and some very windy autumn weather in Germany has limited the need for gas, but the low storage levels and the ongoing concerns about Russia and the Nord Stream 2 pipeline continue to cause some uncertainty. Nonetheless, the market appears to fall further early Friday,” said analysts at Energi Danmark in a morning note.

Power-for-gas demand was set to rise by 4 mcm on Saturday, Refinitiv data showed.

“UK wind power generation is expected to drop tomorrow, although higher and above normal wind speeds will return next week,” Refinitiv analysts said.

Peak wind power generation was forecast at 11.1 gigawatts (GW) on Friday dropping to 5 GW on Saturday, Elexon data showed.

“TTF prices are firmly in the territory where economics would encourage the gas-to-liquids switch in the European power and heating sectors,” analysts at Energy Aspects said in a report.

This switching price range is currently around 64–89 euros/MWh for approximately 32 mcm/d of switching in Western Europe, they added.

“This is not much when considering that starting inventories for end-October will likely equate to 105 mcm/d less gas available for winter delivery than the five-year average.”

The benchmark Dec-21 EU carbon contract CFI2Zc1 was down 0.29 euro at 60.25 euros per tonne.

The benchmark Dec-21 British carbon contract UKAFMc1 had yet to trade.
Source: Reuters (Reporting by Nora Buli in Oslo and Marwa Rashad in London; Editing by David Evans)