Prices edge higher as temperatures turn cooler

LONDON, Feb 24 (Reuters) - British and Dutch gas prices edged higher on Friday morning on expectations of increased demand for heating as temperatures turn cooler.

The British day-ahead contract was up 5 pence to 132 pence per term by 0902 GMT, according to Refinitiv Eikon data.

The front-month contract at the Dutch TTF hub, the benchmark for European gas trading, was 1.46 euros higher at 52.16 euros per megawatt hour (MWh).

In Britain local distribution zone demand (LDZ), which is primarily used for heating is forecast at 208 million cubic metres (mcm) on Monday, up 26 mcm on the previous forecast, Refinitiv Eikon data showed.

Britain’s wind power output is also set to dip to 9.8 gigawatts on Saturday, down from 13.5 GW on Friday, Elexon data showed.

Lower wind power often leads to an increase in demand for gas from gas-fired power plants.

Cooler temperatures are also expected to boost demand for gas in northwest Europe (NWE).

“Our NWE LDZ consumption forecast is comparable with increased consumption most notable on DA (day-ahead) which is up 1,563 gigawatt hours/day (GWh/d) to 4,970 GWh/d in line with a 5 degree Celsius drop in temperatures,” Refinitiv analyst Wayne Bryan said in a daily research note.

Europe's gas storage sites were around 63% full overall, with the region's biggest consumer Germany seeing levels of 71%, according to Gas Infrastructure Europe data.

Russia's Gazprom said it will ship 41.4 million cubic metres (mcm) of gas to Europe via Ukraine on Friday, a similar level to Thursday.

In the European carbon market, the benchmark contract rose by 0.69 euros to 98.27 euros a tonne.

The contract earlier this week hit a record high over 100 euros a tonne.