UK GAS-Prices rise amid concerns about U.S. LNG production

Credit: REUTERS/Stefan Wermuth

British and Dutch wholesale gas prices rose on Friday morning, ahead of a UK holiday on Monday, amid concerns about the impact of storms on U.S. liquefied natural gas (LNG) production.

LONDON, Aug 27 (Reuters) - British and Dutch wholesale gas prices rose on Friday morning, ahead of a UK holiday on Monday, amid concerns about the impact of storms on U.S. liquefied natural gas (LNG) production.

The UK contract for weekend delivery TRGBNBPWE rose by 5.90 pence to 116.50 pence per therm by 0845 GMT.

The month-ahead price TRGBNBPMU1 rose by 3.20 pence to 118.00 p/therm.

The Dutch gas price for September TRNLTTFMc1 was 0.85 euro higher at 46.75 euros per megawatt hour.

U.S. natural gas futures rose 7% on Thursday, driven by a smaller-than-expected storage build and concerns about a storm in the Gulf of Mexico, which could also be bullish for European prices.

A state of emergency declared in Louisiana ahead of upcoming storms could limit liquefied natural gas production, supporting global gas prices.

"Admittedly, 'only' 5% of U.S. natural gas is produced in the Gulf of Mexico. However, the gas market is tight in any case," said analysts at Commerzbank.

Prices also continue to be sensitive to any news regarding the potential start of flows through the Nord Stream 2 pipeline.

Flows are only likely to start when the German energy regulator grants a system operator licence which could potentially be done by mid-December, consultancy Energy Aspects said.

The analysts also expect flows to be around 1.5 billion cubic metres (bcm), not 5.6 bcm announced by Gazprom last week. [nL1N2PQ18X[

"We think Gazprom was speaking about its technical capability to deliver gas, with a tacit caveat that it needs German approval to actually begin flows, and so gave that figure as a volume that can be delivered to Europe, rather than what will be delivered to Europe," the analysts said.

Norwegian exports to continental Europe and Britain are slightly lower, likely due to the start of some outages. But LNG send-out was stable and UK Continental Shelf supply slightly higher.

Britain's gas system was 7 million cubic metres (mcm) over-supplied, with demand forecast at 147 mcm and supply at 154 mcm/day, National Grid data showed.

The benchmark Dec-21 EU carbon contract CFI2Zc1 was 0.99 euro higher at 57.85 euros a tonne. The benchmark Dec-21 British carbon contract UKAFMc1 was slow to trade.

(Reporting by Nina Chestney)

((nina.chestney@thomsonreuters.com; nina.chestney.thomsonreuters.com@reuters.net))

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