Prices fall on higher Norwegian imports, strong LNG flows

9/26/2022

(Reuters) - British and Dutch wholesale gas prices fell on Monday morning as higher Norwegian imports and strong flows of liquefied natural gas (LNG) mitigated an forecast rise in heating demand due to an expected cold spell next week.

The Dutch front-month contract was 8.90 euros lower at 172.00 euros per megawatt hour (MWh) by 0912 GMT, while the November contract fell by 9.30 euros to 190.20 euros/MWh.

The British day-ahead contract was down 25.00 pence at 190.00 pence per therm while the October contract fell by 20.50 to 250.00 p/therm.

"We are quite bearish. Demand isn't stronger anymore and we're fully loaded on storage and LNG," said a European gas trader.

Refinitiv analysts said that a cold spell expected in northwest Europe (NWE) next week will boost heating demand in the region and support spot prices across European hubs, adding that gas-for-power demand is projected to rise on the day-ahead amid low wind speeds.

"These bullish factors are, however, mitigated by increasing Norwegian production output while the heavy maintenance season is ending. Busy cargo arrival schedule in NWE is also adding to looser balance forecast with quick storage injections," said Refinitiv gas analyst Kasia Piaskowska.

Total Norwegian gas pipeline nominations on Monday for Europe rose to 290 millions of cubic metres per day (mcm/d) versus 268 mcm/d in the previous day.

Analysts at Engie's EnergyScan said that draft proposals from the European Commission ahead of the next European Energy Council meeting planned of Friday may inject some volatility.

The European Union's securities watchdog has proposed a temporary brake on gas and electricity derivatives when prices spike to improve the overall functioning of the energy market.

In the European carbon market, the benchmark contract was up by 1.1 euros at 66.83 euros a tonne.

(Reporting by Marwa Rashad; Editing by Nina Chestney)