British and Dutch gas contracts rose on Wednesday morning as low wind speeds and colder weather increased demand for power generation and heating, although ample storage levels offered stability to markets.
The benchmark Dutch benchmark front-month contract rose by 6.00 euros to 137.00 euros per megawatt/hour (euros/MWh) by 0937 GMT, Refinitiv Eikon data showed.
The British within-day gas contract was up 16.00 pence at 340.00 pence per therm, and the day-ahead contract rose by 28.00 p to 347.00 p/therm.
“The forecast of cold winter weather to arrive later this week seems to lift natural gas and thus electricity prices,” said Norbert Rücker, analyst at Swiss private bank Julius Baer.
The bounce lacks fundamental support. Natural gas storage remains full and exceeds the ranges usually seen around this time of the year.”
European gas inventories were around 93% full, compared to a peak of 95% in mid-November.
“Net storage withdrawals have intensified in the past days. But, overall, EU gas stocks remain comfortable for the moment,” said analysts at Engie EnergyScan.
High imports of liquefied natural gas (LNG) into Europe also capped the gains, Refinitiv analysts said, with a flurry of cargoes on route to European terminals.
Britain’s gas market was around 2 million cubic metres (mcm) oversupplied on Wednesday morning, with demand expected at around 341 mcm and supply forecast at around 343 mcm, National Grid data showed.
The wind speeds remained low, leading to stronger demand for gas for power. Peak wind generation was expected at around 4 gigawatts (GW) on Wednesday and 3.8 GW on Thursday, out of a total metered capacity of more than 22 GW, Elexon data showed.
Eastbound gas flows fell on Wednesday morning on the Yamal-Europe pipeline to Poland from Germany, while Russian flows through Ukraine to Europe were steady, pipeline operator data showed.
Gas flows from Norway to Britain were expected to rise on Wednesday with nominations, or request for gas, at 106 mcm, up 10 mcm on the previous day.
Source: Reuters (Reporting by Bozorgmehr Sharafedin; editing by Nina Chestney)