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Prices dip on mild weather outlook, ample LNG

British and Dutch gas prices eased on Thursday morning as mild weather forecasts and a steady supply of liquefied natural gas (LNG) outweighed a small drop in Russian supplies and wider geopolitical concerns.

In the British gas market, the day-ahead price TRGBNBPD1 was 1.00 pence down at 237.00 pence per therm by 0928 GMT, while the within-day contract TRGBNBPWKD was down 5.00 pence at 235.00 pence/therm.

In the Dutch market, the front-month contract TRNLTTFMc1 fell 1.10 euro to 106.20 euros per megawatt hour (MWh). All three contracts surged to record highs last month following Russia’s invasion of Ukraine.

“The high geopolitical uncertainty remains, but fundamentals provide a neutral direction today,” analysts at Refinitiv said in their morning report.

Gas consumption should increase for Friday and provided a moderate bullish risk, they said.

“But the outlook for milder weather from next week and the continuation of solid LNG sendout is the factor on the bearish side,” Refinitiv added.

However, future LNG deliveries still depend on a premium to Asian markets, analysts at Engie EnergyScan warned in a morning report.

“If Asian buyers do not lower their bids, European prices will not keep their downtrend because Europe cannot afford a drop in its LNG supply,” they said.

There are also lingering concerns over future Russian gas supplies and uncertainty over the scope of European sanctions on Russian coal and European Union member states’ approach to rouble payments for Russian gas deliveries, analysts said.

Russian gas deliveries to Europe via three key pipeline routes dipped slightly on Thursday in line with nominations, with Russia’s Gazprom GAZP.MM saying it continues to supply gas to Europe via Ukraine in line with requests from European consumers.

In a further move by European countries to free themselves from dependency on Russian energy supplies, Finland and Estonia said they are planning a joint floating LNG terminal.

In the European carbon market, the benchmark contract CFI2Zc1 firmed 0.30 euros to 77.48 euros a tonne.
Source: Reuters (Reporting by Nora Buli; Editing by Jan Harvey)

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