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EUROPE GAS-Prices fall on receding supply concerns, high storage levels

British and Dutch wholesale gas prices fell on Friday and were on track for a weekly decline as the start of reverse flows from France to Germany eased some supply concerns while gas storage levels continued to increase.

The benchmark front-month Dutch contract was down 5.48 euros at 148.02 euros per megawatt/hour (EUR/MWh) by 0903 GMT, the lowest level since July. The contract was on track for 3.5% fall week-on-week.

British front-month contract fell by 5.00 pence to 275.00 pence per therm. The contract has fallen almost 3% week-on-week.

Germany received on Thursday the first direct gas deliveries from France through a pipeline link under a deal aimed at helping both countries cope with current energy supply problems.

“The start-up of reverse flows of natural gas from France to Germany is a further sign of expanding interconnectivity between European partners which should support greater supply balance between storage and import sites across the continent,” said analysts from Fitch Solutions.

European natural gas storage continued to build with current levels reported at 92%. Fitch Solutions estimates for storage to surpass 95% by Nov. 1.

Prices also found some relief after Norwegian police said a threat made by telephone against the Nyhamna gas processing plant had been resolved.

“Yesterday’s event reminds us there are heightened concerns about the security of European oil and gas infrastructures,” said Engie’s EnergyScan analysts.

Mild temperatures, steady flows from Norway and strong wind also put pressure on British gas prices.

In the UK, the gas system was 14.5 mcm over-supplied, according to National grid Data.

Peak wind generation was forecast at above 7 gigawatts (GW) on Friday and was expected to rise to 13.5 GW on Friday, Elexon data showed, out of total metered capacity of around 20 GW.

In the European carbon market, the benchmark contract was 0.82 euro lower at 68.02 euros a tonne.
Source: Reuters (Reporting by Bozorgmehr Sharafedin; editing by Nina Chestney)

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