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Prices rise on Malaysia LNG outage, wider supply concerns

Dutch and British wholesale gas prices rose on Thursday morning, driven by expectations of increased competition for liquefied natural gas (LNG) supplies and as concerns about post-winter stock build gained prominence.

In the Dutch market, the day-ahead price was up by 15.83 euros at 107.40 euros per megawatt hour (MWh) by 0923 GMT.

The UK equivalent rose by 33.00 pence to 155 pence per therm and the within-day contract soared 42 pence to 160 pence/therm.

The UK market looked tight amid maintenance at the St. Fergus terminal, an unplanned nuclear outage and “tepid” send-out of LNG into the British gas system, a trader said.

The UK system was under-supplied by 18.2 million cubic meters (mcm) per day on Thursday morning, according to National Grid data.

“The market’s greater focus is on the front-month balance when temperatures are expected to drop and have a greater impact on demand swings,” Refinitiv analyst Yuriy Onyshkiv said.

News of Malaysia’s Petronas declaring force majeure on supply to its LNG export facility due to a pipeline leak have also lifted European gas prices, starting late on Wednesday, analysts said.

“The developments could increase competition between Asia and Europe over uncommitted LNG cargoes,” Refinitiv’s Onyshkiv said.

The Dutch front-month contract traded as high as 183 euros/MWh on Thursday morning, and was last seen at 175.75 euros/MWh, up 0.25 euros. Further out, the contract for the first quarter 2023 rose by 8.80 euros to 188.30 euros/MWh. The British first quarter contract was up by 19 pence at 505 pence/therm. The rise in oil prices provided additional support, anlaysts at Engie EnergyScan said.

Oil prices stabilized near three-week highs on Thursday after OPEC+ agreed to further tighten global crude supply. Analysts also warned against complacency over high European gas storages, which are nearly 90% full.

“With Europe’s winter season now in sight, gas markets are snug but by no means cozy,” Rystad Energy analyst Emily McClain said in a market note.

An early or extended winter could yet send gas stocks downward, pushing prices higher, she added.

On Wednesday, the head of the International Energy Agency, Fatih Birol, also warned Europe may face an even more acute energy crunch next year.

In the European carbon market, the benchmark contract inched up by 0.83 euro to 67.90 euros a tonne.
Source: Reuters (Reporting by Nora Buli in Oslo; Editing by Emelia Sithole-Matarise)

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