Thursday, September 21

Prices ease but uncertainty remains around Russian gas

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LONDON — British and Dutch wholesale gas prices eased on Friday, after steep gains earlier this week, but uncertainties around Russian flows to Europe kept prices near five-month highs.

The front-month Dutch gas contract was down 6.00 euros at 200 euros per megawatt hour (MWh) at 0917 GMT, while the contract for September delivery fell by 7.10 euros to 200 euros/MWh.

The British day-ahead contract fell by 35.00 pence to 315.00 pence per therm, while the contract for August delivery was 8.00 pence lower at 322 p/therm.

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Russian gas flows to Europe via Nord Stream 1 remained steady on Friday morning.

Russia cut flows on the pipeline to just 20% of its capacity on July 27 citing maintenance work which will make it harder for the bloc to fill up storage ahead of the winter.

“The (Dutch) TTF natural gas price has exceeded the 200 euros per MWh mark again for the first time since early March,” said Commerzbank analyst Carsten Fritsch.

“It is likely for the time being to remain at a high level – and if (Russian) supply were to be halted entirely, another price surge would no doubt be on the cards,” he added.

Refinitiv analysts also expected “spot prices to remain volatile following continued uncertainty related to Russian supply.”

Wind speeds are expected to increase over the weekend, above seasonal normal, which should lower demand for gas from power plants.

UK peak wind power generation is forecast at 4.8 gigawatts (GW) on Friday, rising to 6.6 GW on Saturday, out of a total metered capacity of 19.9 GW, Elexon data showed.

Outages at the UK Continental Shelf (UKCS) next week and lower send-out from liquefied natural gas terminals could also support prices, Refinitiv gas analysts said.

In the European carbon market, the benchmark contract fell by 0.66 euros to 78.30 euros a tonne.

(Reporting by Bozorgmehr Sharafedin; editing by Nina Chestney)