British and Dutch wholesale gas priced edged higher on Friday morning as cooler temperatures lifted demand for heating.

The British day-ahead gas price rose by 2 pence to 98 pence per therm by 0855 GMT, Refinitiv Eikon data showed.

The British weekend price was up 1.5p at 96.50 p/therm.

“The latest (temperature model) forecasts a total increase of 20 million cubic metres/day in demand on day-ahead with the onset of the cold spell which is expected to continue into the middle of next week,” Refinitiv analyst Tim Crump said in a daily research note.

The weekend contract at the Dutch TTF hub rose by 0.50 euros to 41.10 euros per megawatt hour (MWh).

The front-month Dutch contract edged up by 0.05 euros to 40.75 euros/MWh.

Analysts warned that European prices are likely to rise further in the months ahead.

“As a result of supply tightness, gas prices are likely to rise again in the coming months. We expect TTF prices to average 80-90 euros/MWh in 2H23,” UniCredit economist Edoardo Campanella said in a research note, adding that Europe’s success in replacing Russian gas last winter could lead to complacency and reduce efforts to curb consumption.

Europe has also relied heavily on high imports of liquefied natural gas (LNG) to meet demand and fill the gap left by lower flows of gas from Russia.

“Were imports of Russian gas to stop completely, the amount of LNG needed would be even higher and probably beyond Europe’s regasification capacity,” Campanella said.

Russian gas supply to Europe through Ukraine remained stable on Friday at 42.6 mcm.

In the European carbon market, the benchmark contract CFI2Zc1 fell by 0.54 euros to 91.42 euros a tonne.
Source: Reuters (Reporting by Susanna Twidale Editing by David Goodman )