Dutch and British gas prices were stable on Wednesday morning as high storage levels helped offset strong demand for gas for heating amid cool temperatures.

The Dutch December contract slipped by 0.15 euro to 42.90 euros per megawatt hour (MWh) by 0926 GMT, LSEG data showed.

The Dutch January contract was down by 0.03 euros at 43.97 euros/MWh.

The British day-ahead contract edged up by 0.6 pence at 112 p/therm.

“The latest long-term weather forecast predicts lower temperatures than expected from mid-December until mid-January 2024,” LSEG analyst Tomasz Marcin Kowalski wrote in a daily research note.

“Bullishness (is) likely to be limited by solid supply and very high stock levels,” Kowalski added.

Although European gas storage inventories have started to fall they remain at record highs for the time of year, around 97% full, according to latest data from Gas Infrastructure Europe.

Analyst at Jefferies said the risk of a prolonged and harsh winter draining Europe’s gas stores was abating.

“While an average European winter could still bring 2024 trough gas inventories sub-40 billion cubic metres… and provide incremental support to 2024 prices, this is becoming a low probability scenario,” Jefferies analysts said.

The analysts said they expect Europe to exit winter with storage sites still around 49% full.

In the European carbon market, the benchmark EU Allowance (EUA) contract CFI2Zc1 edged up by 0.11 euro to 73.07 euros a metric ton having earlier hit a year low of 71.50 euros.

Weaker gas prices have led some power generators to switch from using coal to using gas. As gas power plants emit half the carbon dioxide as coal-fired power plant this reduces demand for carbon allowances.

“The main bearish risk for EUAs, a drop in gas prices triggering coal-to-gas switching, indeed materialized,” analysts at Engie EnergyScan said.
Source: Reuters (Reporting By Susanna Twidale; Editing by Krishna Chandra Eluri)