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EUROPE GAS-Prices extend rally on cold weather forecast, supply concerns

British and European wholesale gas prices extended their rally on Thursday morning on supply concerns, forecasts of cold weather and short-covering ahead of the official start to the winter gas season on Friday, when heating demand picks up.

* The British day-ahead contract was 26.0 pence higher at 204.00 p/therm by 0825 GMT.

* The British wholesale gas for November delivery rose by 17.25 pence to 236.25 p/therm.

* The October gas price at the Dutch TTF hub, a European benchmark, was up 3.75 euros at 90.25 euros per megawatt hours (MWh).

* “Flows from Russia are reduced and the supply fears are growing further. Both on the day ahead market and on long-term contracts, prices are climbing rapidly, and the fiercely bullish sentiment affects all the related markets heavily,” Energi Danmark said in a research note.

* Temperatures in Britain were expected to drop below seasonal normal levels on Thursday, and next week will continue to see partially wet and windy weather.

* Local distribution zone (LDZ) consumption, which mostly reflects heating, is expected to rise by 28 million cubic metres (mcm) to 96 mcm per day, as heating demand starts picking up, Refinitiv analysts said in a weekly report.

* However, Britain’s gas system was about 18 million cubic metres (mcm) over-supplied on Thursday, with supply forecast at 227 million cubic metres (mcm) and demand at around 209 mcm, National Grid data showed.

* Peak wind power generation was forecast at around 12.5 GW on Thursday, and 13.6 GW on Friday, Elexon data showed. Higher wind output typically reduces gas demand from power plants.

* The benchmark Dec-21 EU carbon contract was down 1.14 euro at 61.75 euros per tonne.
Source: Reuters (Reporting by Marwa Rashad in London and Nora Buli in Oslo; Editing by Kim Coghill)

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