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EUROPE GAS-Prices fall as strike in Norway ends

British wholesale gas prices fell sharply on Wednesday morning after a strike in the Norwegian oil and gas sector threatening a 13% export cut ended overnight, easing supply concerns.

The British day-ahead contract sank by 102 pence to 163 pence per therm by 0836 GMT, with the within-day contract down 110 pence at 155 p/therm.

The Dutch day-ahead price fell by 18.80 euros to 159.25 euros per megawatt hour (MWh), and the benchmark front-month contract dropped by 16.50 euros to 157 euros/MWh.

“Up yesterday, European gas prices are down this morning following the Norwegian government intervention to end the strike of offshore oil and gas workers,” analysts at Engie EnergyScan said in their daily market update.

The strike started on Tuesday, initially with little impact on gas supplies, but a planned escalation could have reduced Norwegian gas exports by 13% on Wednesday.

Norwegian gas export nominations were up on Wednesday morning.

Profit-taking and anticipated demand destruction probably also contributed to Wednesday’s drop in prices, Engie EnergyScan said.

The International Energy Agency on Tuesday forecast global natural gas demand to drop by 0.5% this year.

Flows of Russian gas to Europe via the Nord Stream 1 pipeline – another key driver for European gas prices – returned to levels seen in recent weeks on Wednesday, after dipping a day earlier, operator data showed.

The Nord Stream 1 pipeline will undergo regular annual maintenance from July 11 to July 21, when flows usually fall to zero, raising concern over how promptly they will resume afterwards.

In the UK, the gas system was over-supplied by 18.2 million cubic metres, National Grid data showed.

“UK gas system opened considerably over-supplied this morning on a brief surge of wind power generation capacity expected today,” analysts at Refinitiv said in a note.

However, wind speeds will fall sharply tomorrow, increasing gas for power demand, they added.

In the European carbon market, the benchmark contract CFI2Zc1 edged down by 0.06 euro to 83.13 euros a tonne.
Source: Reuters (Reporting by Nora Buli in Oslo; editing by Nina Chestney)

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