Europe Gas: Prices mixed ahead of transit auctions, milder temperatures
European wholesale gas prices were mixed on Friday morning, with the Dutch month-ahead up slightly of transit auctions next week but British prompt prices down on oversupply and milder temperatures.
* The Dutch wholesale gas price for November rose by 2.49 euros to 100.00 euros per megawatt hour by 0758 GMT, having risen to 103.90 in earlier trade.
* Prices could be supported by another rise in Asian coal prices, as well as uncertainty about supply, with eyes on whether Gazprom books gas transit capacity in monthly auctions scheduled for Monday, traders said.
* However, there is room for some price correction after breaching some technical resistance levels yesterday, said analysts at Engie EnergyScan.
* Chinese coal prices have reached record highs as cold weather swept into much of the country and power plants scrambled to stock up on coal.
* Analysts at Fitch Solutions said they except energy price volatility to remain high through the winter, with prices expected to climb even further before pairing back in response to warmer weather.
* However, prices will stay substantially higher than long-term averages.
* “There is a high risk that prolonged or extreme weather events could see stockpiles remain lower than average for longer, setting the stage of continued high energy prices throughout 2022 at least, adding to the risk of energy consumption curtailment at the expense of economic output,” Fitch Solutions added.
* In the UK market, the day-ahead price was down 6.73 pence at 2.30 pounds per therm, while the weekend contract was 6.00 pence lower at 2.29 pounds/therm.
* In both Britain and north-west Europe, temperatures are forecast to rise slightly above seasonal norms and increase further next week, which could dampen heating demand, Refinitiv Eikon data showed.
* The UK system was over-supplied by around 34 million cubic metres. There is higher send-out of liquefied natural gas than recently, weaker exports and stronger wind output forecast.
* In Britain’s power market, National Grid said on Thursday it expects its 2-gigawatt power link with France, which has been offline for an extended outage, to be running at half capacity a few days sooner than planned.
* The benchmark Dec-21 EU carbon contract dipped by 0.11 euro to 61.33 euros a tonne.
* The benchmark Dec-21 British carbon contract inched down by 0.24 pounds to 66.00 pounds/tonne.
* More than a million carbon permits were not sold at a UK auction last week and their sale will now be spread out across the next four auctions, the UK’s Emissions Trading System (UK ETS) Authority said.
Source: Reuters (Reporting by Nina Chestney)