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EUROPE GAS – Prices slide with energy complex on new virus variant concerns

European and British wholesale gas prices fell on Friday morning along with the rest of the energy complex, as the discovery of a new coronavirus variant stoked fears of curbed economic activity and oversupply in oil markets.

The British day-ahead gas contract was down 3.50 pence at 2.265 pounds per therm by 1000 GMT.

The Dutch TTF equivalent traded 1.35 euros lower at 90.85 euros per megawatt hour (MWh).

The benchmark Dutch front-month contract slipped 3.60 euros at 89.90 euros/MWh.

Analysts said concerns over the virus variant had offset bullish fundamentals in the gas market such as weak Russian supplies and a rise in demand as temperatures fall.

“The gas fundamentals point strongly bullish… with temperatures and the wind speeds forecast to drop,” analysts at Refinitiv said in a daily research note.

“The uncertainty around the new variant in South Africa is sending stock and commodity markets down this morning,” the Refinitiv analysts said.

WTI U.S. crude oil futures fell more than $5 per barrel on fears the variant, which Britain said scientists considered the most significant found to date, could restrict travel and dampen economic growth and fuel demand.

Lower temperatures are expect to increase gas demand next week.

The Refinitiv analysts forecast British local distribution zone gas demand, which is primarily used for heating, at 265 million cubic metres (mcm) a day for Monday, up 34 mcm on the previous forecast.

Meanwhile, Russian natural gas supplies to Germany through the Yamal-Europe pipeline have been flowing at a steady rate for the past 24 hours on Friday morning, but were down from the previous day’s early hours, data from German network operator Gascade showed.

In other markets, the European benchmark December 2021 EUA contract CFI2Zc1 was down 2.20 euros at 72.26 euros/tonne having hit a record high over 75 euros on Thursday.
Source: Reuters (Reporting By Susanna Twidale; editing by Uttaresh.V)

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