Prices fall on muted demand, return of Norwegian flows

July 6 (Reuters) - Dutch and British wholesale gas prices were down on Thursday morning amid expectations of increasing gas flows from Norway and reduced industrial demand, while Europe's storage sites continued to be filled.

The benchmark front-month Dutch contract was down 1.72 euro at 33.65 euros per megawatt hour (MWh) by 0909 GMT, with the September contract down 2.05 euros at 34.65 euros/MWh, Refinitiv Eikon data showed.

"Gas storage levels in Europe are at the top end of the five-year range, putting the region it in a healthy position going into the second half of the year," Rystad Energy analyst Nikoline Bromander said in a market update.

Industrial sector demand has also been muted in recent months, Bromander said, highlighting Germany, where consumption from January to May this year was down roughly 10% compared to 2022 levels.

Europe's gas stocks are 78.9% full, the latest data from Gas Infrastructure Europe showed, with analysts and traders expecting storages to be full by September.

"This suggests that we should see renewed pressure on European natural gas prices as we move through the third quarter," analysts at Dutch bank ING said in note.

With gas prices having come off in 2023 and currently trading in a 30-35 euros/MWh range, demand has not responded, raising the question of how much of the demand destruction since the war is permanent, they added.

Price support from maintenance outages at gas infrastructure on the Norwegian continental shelf (NCS) is also waning as production ramps up again.

"In ten days, NCS outage will be close to zero, we could be close to 85% full, and may start to test the bottom (of prices)," a trader said.

On the prompt, the Dutch-day ahead contract eased by 1.23 euros to 33.67 euros and its British day-ahead equivalent was down 2.48 pence at 82.00 pence per therm.

In the European carbon market, the benchmark contract firmed 0.11 euros to 85.92 euros a tonne.