Prices rise on lower renewables generation, demand remains weak

LONDON, July 21 (Reuters) - Dutch and British wholesale gas prices rose on Friday morning on expected lower wind and solar output, but the rise isn't expected to last as demand remains soft due to strong inventories.

The benchmark front-month Dutch contract was up 1.15 euros at 29.65 euros per megawatt hour (MWh) by 0845 GMT according to Refinitiv Eikon data.

The Dutch day-ahead contract rose by 2.92 euros to 30.00 euros/MWh.

The British front-month contract was up by 3.80 pence to 75.20 p/therm.

Analysts at Engie's Energy Scan said the expected drop in wind and solar generation - with an average of 13,333 megawatt (MW) in Germany for Friday compared to 19,727 MW on Thursday, has exerted upward pressure.

In Britain, peak wind power generation was forecast at 2.8 gigawatts (GW) on Friday, from a total metered capacity of 22 GW, Elexon data showed.

"Markets have become quite erratic with sensitivity to things like hot weather in the summer and that's pushing prices higher and maybe a bit of the tensions heating up on the Russian side with the mention of quotas for energy exports," a European gas trader said.

"For today, the move up is likely overdone and may well correct back down unless we see some other news coming out, like other outages or further changes in weather forecasts," he added.

Europe's gas storage sites were 82.5% full according to Gas Infrastructure Europe, meaning the bloc is well on track to meet a target to have stores 90% full by Nov. 1.

Flows of Russian gas to Europe via Ukraine remained stable.

Russia's Gazprom said that it will ship 42.5 million cubic metres of gas to Europe via Ukraine on Thursday.

In the European carbon market, the benchmark contract edged up by 0.70 euro to 91.22 euros a metric ton.

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