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EUROPE GAS-Prices fall amid robust LNG supply

Thu, 13th Jan 2022 09:45

LONDON, Jan 13 (Reuters) - British and Dutch gas prices
mostly fell on Wednesday due to robust liquefied natural gas
supply and slightly higher temperatures to the end of the week.

The British contract for February delivery fell
by 12.90 pence to 1.29 pounds per therm by 0944 GMT, while the
Dutch contract March contract slipped by 2.10 euros
to 71.90 euros per megawatt hour (MWh).

The Dutch February contract inched down by 0.30
euro to 73.45 euros/MWh.

Britain is set to receive a record number of LNG cargoes
this month, adding to ample supply.

The Japan-Korean Marker reference price for LNG for March
also appears to be slipping.

"While there is still some spot tension in the Asian market,
this situation is not expected to last, which should maintain a
comfortable LNG supply for Europe," said analysts at Engie
Energyscan.

Temperatures in Britain and north-west Europe are forecast
to rise above the seasonal norm by the end of the week before
dropping again next week, Refinitiv Eikon data showed.

Weaker wind output towards the end of the week is also
expected which could increase gas-for-power demand.

The British day-ahead price was 2.00 pence
higher at 1.80 pounds per therm.

Although UK storage sites are currently 93% full,
consultancy Wood Mackenzie said stock levels in Europe could
drop to a record low of 15 billion cubic metres (bcm) by the end
of March due to low Russian imports.

Requirements to refill storage will be around 20-25 bcm more
this year even though prices could eventually come down as
Spring approaches.

"Cold weather in Europe could exacerbate the situation
further, adding up to 10 bcm to gas demand through the rest of
the winter, pushing storage levels to zero unless more Russian
gas is supplied, and Europe may have to tap into cushion gas to
balance the market," said Kateryna Filippenko, principal analyst
of European gas research at Wood Mackenzie.

The Yamal-Europe pipeline, which usually sends Russian gas
west into Europe, saw flows move east from Germany to Poland for
the 24th day on Thursday.

In other markets, the European benchmark December 2022
emission allowance (EUA) contract euros inched up by
0.06 euro to 80.07 euros a tonne.

(Reporting by Nina Chestney)

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