EUROPE GAS-Prices rise as Russian supplies remain low, temperature turns cooler
Benchmark European and British wholesale gas prices rose on Wednesday morning, buoyed by continued low supplies from Russia and as cooler temperatures ramped up gas demand for heating.
The British gas contract for day-ahead delivery TRGBNBPD1 rose 26 pence to 2.27 pounds/therm by 1045 GMT.
The Dutch front-month contract TRNLTTFMc1 – the European benchmark – was up 2.7 euros at 92.20 euros per megawatt hour (MWh).
The British front-month contract TRGBNBPMG2 rose 14.5 pence at 2.28 pounds/therm.
Flows on the Poland section of the Yamal Russia -Europe pipeline were in reverse, flowing eastwards for a 16th consecutive day while deliveries of Russian gas via Ukraine to Europe remained low.
“We just don’t know what to expect with Russian flows, so we have to trade any ‘known’ factors as soon as they become available,” a gas trader said.
Average temperatures in Northwest Europe are expected at 4.1 degrees Celsius for Wednesday and 2.1C for Thursday, weather models on Refinitiv Eikon showed.
The forecasts were 4.3C and 2C lower, respectively, than previous expectations.
Gas demand from power plants was also expected to remain strong with wind power output expected to drop in Germany from Thursday.
“Wind power output decreases significantly tomorrow, and is expected to average below normal at 14.9 GWh/h,” analysts at Refinitiv said in a daily research note.
Analysts also said low storage levels across Europe are likely to provide support to gas prices.
“We continue to see asymmetric upside risk to European gas prices throughout this winter and potentially next summer due to acute inventory shortfalls,” analysts at Bank of America said.
In other markets, the European benchmark December 2022 emission allowance (EUA) contract CFI2Zc1 was up 1.44 euros at 86.35 euros a tonne.
Source: Reuters (Reporting by Susanna Twidale; Editing by Kim Coghill)