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Prices rise on more demand, Russian supply uncertainty

British and Dutch wholesale gas prices rose on Thursday with heating demand rising amid cooler weather and due to ongoing uncertainty about the level of Russian supply in the coming months.

The British wholesale gas contract for day-ahead delivery was up 18.05 pence at 236.55 pence per therm by 0936 GMT. The Dutch TTF day-ahead contract was up 5.00 euros at 96.50 euros per megawatt hour (MWh).

A ramp-up of 10 MMm3 in local distribution zone demand, which mainly covers heating, and lower wind speeds were bullish factors for Friday, analysts at Refinitiv said.

"Extant winter storage concerns will also continue to underpin price and volatility," they added.

Average temperatures in north-west Europe are forecast remain below normal levels over the remainder of the week, they added.

The UK gas system was 2.3 MMm3 under-supplied, National Grid data showed. Peak wind power generation is forecast to fall from 11.6 gigawatts (GW) on Thursday to 9.9 GW on Friday, Elexon data showed.

The November gas price at the Dutch TTF hub, a European benchmark was up 3.25 euros at 97.50 euros/MWh.

The December UK price was 13.50 pence higher at 258.50 pence per therm.

Prices rose on uncertainty over Russian supplies in the coming months, following comments from Russian President Vladimir Putin that the country is prepared to send more gas to Europe if asked to, analysts at Engie Energyscan said in a morning report.

Renewing the gas partnership between Russia and the EU could take time and may not resolve the short-term problem of low storages and supply, they added.

"Therefore, although profit taking by financial participants can still pull prices below their technical resistances, the risk seems to be upward now, particularly as Asia coal prices continued to rise today," they added.

Meanwhile, Russian Deputy Prime Minister Alexander Novak told a forum on Thursday the country will prioritise gas supplies for its home market. A trader also highlighted fresh UK supplier bankruptcies, rising margin calls in the financial gas markets and coal market strength as bullish drivers.

The benchmark Dec-21 EU carbon contract was up 0.84 euro at 59.91 euros per ton.

The benchmark Dec-21 British carbon contract was up 0.52 pounds at 66.45 pounds/ton.

Reporting by Nora Buli in OSLO; editing by Nina Chestney

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

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