Dutch gas benchmark inches up, but solid supply weighs

LONDON, May 17 (Reuters) - The benchmark Dutch front-month gas contract inched up on Wednesday but remained near its 2-year low on solid inventories and weak demand and is expected to remain at low levels as rising temperatures contribute to lower heating demand.

The Dutch front-month contract was 0.35 euros higher at 32.35 euros ($35.61) per megawatt hour (MWh) by 0848 GMT, near its lowest level since June 2021, while the day-ahead contract was 0.42 euros higher at 32.05 EUR/MWh, Refinitiv Eikon data showed.

"We keep a stable to bearish outlook for European gas prices today as temperatures are expected to increase gradually above seasonal norms from this weekend in Western Europe and LNG import terminals remain busy," analysts at Engie's EnergyScan said in a morning note.

"Peaks in solar and wind power generation this weekend could add further bearish pressure on the prompt, notably as TTF front-month prices still have some downward potential," they added.

Europe's gas storage sites are almost 64% full, latest data from Gas Infrastructure Europe showed.

In Britain, the day-ahead gas price was 1.6 pence higher at 76.00 pence per therm, while the contract for immediate delivery rose by 3.30 pence to 76.00 p/therm, Refinitiv Eikon data showed.

The system was under supplied by 12.2 million cubic meters (mcm), National Grid data showed.

This is mainly due to softer LNG flows and lower Norwegian imports, Refinitiv analyst Wayne Bryan said.

Peak wind power generation in Britain is forecast at 4.3 gigawatts (GW) for Wednesday and at the same level on Thursday, out of a total metered capacity of 22 GW, Elexon data showed.

"The fundamental picture is as such that sideways movement is expected to continue with prices edging lower," Bryan said.

In the European carbon market, the benchmark contract was down 0.71 euro to 87.83 euros a tonne. ($1 = 0.9084 euros)