Dutch and British wholesale gas prices rose on Thursday morning as a cold spell across Europe and weaker wind raised demand for gas but strong flows of liquefied natural gas (LNG) and healthy inventories could limit further gains.

The Dutch front-month contract was up 2.35 euros at 63.60 euros per megawatt hour (MWh) by 0922 GMT, while the contract for March delivery was up 1.50 euros at 63.50 EUR/MWh, according to Refinitiv Eikon data.

The British within-day TRGBNBPWKD contract rose by 2.50 pence to 162.00 p/therm, while the day-ahead contract was up 5.00 pence at 163.00 p/therm.

“The market appears to be…testing levels it hasn’t seen for over a year,” consultancy Auxilione said in a report.

Forecasts for demand for gas for heating and power plants forecasts are up 500 gigawatt hours a day (GWh/d) for the day-ahead, with the bulk of the increase coming from the power sector due to lower wind forecasts, according to Refinitiv Eikon data.

“Current cold and less windy conditions should keep the day-ahead supported and there is the risk of several small outages on the UK Continental Shelf being extended,” said Wayne Bryan, director of European gas research at Refinitiv.

UK peak wind generation is forecast at almost 12.1 gigawatts (GW) on Thursday, falling to around 11 GW on Friday, out of a total metered capacity

Lower wind output usually increases demand for gas from power plants.

The EU gas storage sites are 80.6% full, according to Gas Infrastructure Europe data, above the five-year average.

Flows of LNG into north-west Europe are strong, although some traders said that the recent cold spell could require an additional LNG tanker every day to meet demand.

Strong supply and storage has offset a loss of Russian gas pipeline volumes.

Eastbound gas flows through the Yamal-Europe pipeline to Poland from Germany rose on Thursday morning, while Russian supplies to Europe via Ukraine fell.

In the European carbon market, the benchmark contract was up by 1.44 euros at 84.70 euros a tonne.
Source: Reuters (Reporting by Marwa Rashad; editing by Nina Chestney)