UK GAS-Prices firm on lower supply, rising demand

British wholesale gas prices firmed on Wednesday morning on expectations of lower supply and rising demand, despite an oversupplied system.

The October contract was up 1.40 pence at 31.95 p/therm, an intraday high, by 0830 GMT.

The day-ahead and within day contracts were yet to trade.

Day-ahead prices should rise, however, said analysts at Refinitiv, as some Norwegian flows would be re-routed to the Continent following the end of maintenance at processing plant Karstoe.

This would see Langeled pipeline flows to the UK drop from current levels of 42 mcm/day.

Gas-for-power demand will drop 9 mcm to 59 mcm on Thursday, however, limiting price upside, they added.

Peak wind generation is forecast at 7 gigawatts (GW) on Wednesday and 8.7 GW on Thursday, out of total metered capacity of around 18 GW, Elexon data shows.

Lower wind output typically increases demand from gas-to-power plants.

Overall demand in Britain is set to average 113 million cubic metres (mcm)/day next week, up from current levels of 84 mcm/day, with temperatures dropping 2.3 degrees to average 11.3 degrees Celsius over the same period, according to Refinitiv data.

The gas system was over-supplied by 18.1 mcm, with demand at 180.7 mcm and supply at 201.7 mcm/day, National Grid data shows.

The October gas price at the Dutch TTF hub was up by 0.28 euro at 11.88 euros per megawatt hour.

Longer-dates contracts were receiving support from firmer carbon prices, said analysts at Energi Danmark in a morning report.

"We could very well see the market follow the carbon market in the coming time," they added.

The benchmark Dec-20 EU carbon contract eased 0.38 euro to 27.47 euros a tonne, but had gained 1.45 euros on Tuesday amid an afternoon surge.