British and Dutch gas prices rose on Thursday morning amid continued concerns about gas supplies in the event of sanctions if Russia invades Ukraine.
The within-day UK price was 7.50 pence higher at 222.50 pence per therm by 0826 GMT, while the day-ahead contract was up by 6.75 pence at 222.50 p/therm.
In the Dutch market, the February price at the TTF hub was 2.25 euros higher at 93.60 euros per megawatt hour (MWh), while the day-ahead price was 1.30 euros higher at 93.00 euros/MWh.
Bullishness is coming from heightened geopolitical tension if Russia gas transit disrupts due to an invasion of Ukraine, said Refinitiv gas analyst Xun Peng.
The United States said it had set out a diplomatic path to address sweeping Russian demands in eastern Europe, as Moscow held security talks with Western countries and intensified its military build-up near Ukraine with new drills.
U.S. State Department spokesperson Ned Price said the Nord Stream 2 pipeline between Russia and Germany will not move forward if Russia invades Ukraine.
The operator of the pipeline has registered a subsidiary for the German part of the pipeline to meet German regulatory requirements, though certification for the project still remains suspended by Berlin.
Bruegel analysts said in a report that spare European infrastructure capacity could add 17 terawatt hours of weekly imports from Norway, North Africa and liquefied natural gas – nearly replacing levels Europe received from Russia in recent weeks.
However, those countries may not be able to boost deliveries, and measures to curb demand would also be needed.
If there is very cold weather and no Russian gas from February, EU gas storage could be emptied by end-March, they added.
Bearish drivers include the fact that above normal temperatures are expected in Britain and north-west Europe until early February, Refinitiv Eikon forecasts show.
Gas-for-power demand in Britain is forecast lower as wind output is forecast to rise. Norwegian flows are largely stable, while LNG supply is still strong.
In the European carbon market, the benchmark 2022 price CFI2Zc1 inched down by 0.25 euro to 88.41 euros a tonne.
Source: Reuters (Reporting by Nina Chestney)