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Prices soar on supply fears, UK-France power link fire

Wednesday, 15 September 2021 | 20:00

British and European gas prices soared on Wednesday morning on continued fears over low inventories, a lack of liquefied natural gas (LNG) cargos and as a fire at a UK-France power link cut electricity imports to Britain.

The British within-day gas contract was up 15.00 pence at 182.00 p/therm by 0942 GMT.

The day-ahead contract was up 23.50 p at 189.50 p/therm, with both contracts at their highest since March 2018 when a cold snapped, called the Beats from the East, sent prices skyward.

“Bullish fundamentals include low LNG send-out, weak renewable generation and stronger LDZ (Local distribution zone demand),” analysts at Refinitiv said in a daily research note.

Gas demand from British power generators was also expected to rise after National Grid said a fire at its IFA electricity interconnector with France would halt its 2 gigawatts of capacity until Oct.13.

British power prices were already trading near highs as high gas and carbon costs drove up costs amid low wind power output.

The British day-ahead electricity contract TRGBBD1 was up almost 19%, up 75.00 pounds to 475.00 pounds per MWh.

The October gas price at the Dutch TTF hub, a European benchmark, TRNLTTFMc1 was up 8.45 euros at 75.25 euros/MWh having earlier traded at a record high of 79.00 MWh.

High prices in Asia have led to lower deliveries of LNG into Europe over the past few months meaning stock levels are lower than usual heading into the winter months.

“Currently European gas storage is at 71% utilisation, well below a ‘normal’ 86% with only two more weeks left to the end of the gas year,” analysts at UBS said in a research note.

Britain’s Winter 2021 gas TRGBNBPSH2 contract was up 26.50 p to 195.00 p/therm, a fresh record high.

The benchmark Dec-21 EU carbon contract CFI2Zc1 was up 0.30 euro at 60.17 euros per tonne.
Source: Reuters (Reporting By Susanna Twidale; editing by Nina Chestney)

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