Prices rise on cold weather forecast, further upside seen limited

LONDON, March 1 (Reuters) - British and Dutch gas prices rose on Wednesday morning as cold weather forecasts raises demand for heating; however, further upside is seen limited due to healthy inventories and strong flows of liquefied natural gas (LNG).

The British day-ahead contract was up 2.2 pence at 123.20 pence per therm by 0951 GMT, and the weekend contract rose 4.00 pence to 123.00 pence/therm, according to Refinitiv Eikon data.

The front-month contract at the Dutch TTF hub, the benchmark for European gas trading, was 1.12 euros higher at 48.00 euros per megawatt hour (MWh), according to Refinitiv Eikon data.

"The market seems to continue to believe that European gas stocks are comfortable enough to manage the current surge in heating demand," analysts at Engie's EnergyScan said in a morning note.

Europe's gas storage sites were 61.7% full according to Gas Infrastructure Europe data.

While LNG flows to Europe remain robust, the International Energy Agency said that China’s appetite for imported LNG is one of the greatest uncertainties for 2023 and if LNG demand returns to pre-crisis levels, it will intensify competition on global markets and inevitably push prices up again.

"We might need to find a new equilibrium soon of higher prices and lower consumption but for now we're ok," a gas trader said, adding he expects prices to ease later in the day.

Norwegian gas nominations to Britain edged up on Wednesday, while nominations to continental Europe remained stable.

Britain's gas system was undersupplied by 9.3 million cubic metres (mcm) on Wednesday, with supply forecast at 321.3 mcm and demand at around 330.6 mcm, National Grid data showed.

Peak wind generation was expected at around 4.6 gigawatt (GW) on Wednesday and 3.1 GW on Thursday, out of a total metered capacity of more than 22 GW, Elexon data showed.

In the European carbon market, the benchmark contract fell by 0.37 euros to 99.43 euros a tonne.