British and Dutch gas prices continued to rise on Thursday on concerns over escalation since Russia ordered Russia’s first mobilisation since World War Two but further upside is seen limited as governments seek ways to curb demand, Reuters reported.
The Dutch front-month contract, the European benchmark, was up 11.00 euros at 193.00 euros per megawatt hour (MWh) at 0854 GMT.
The British day-ahead contract rose by 12.00 pence to 249.00 pence per therm, and the within-day contract was up 10.00 pence at 250.00 p/therm.
“We are quite bearish again, while of course the escalation is a bullish factor, the EU has lifted sanctions on Russian coal, and will do anything necessary to make sure prices drop,” a European gas trader said.
Refinitiv analysts also echoed the same view, saying that a number or regulatory measures aimed at mitigating the impact of high energy prices will see gas prices following bearish trend as they provide some reassurance to the volatile European gas markets.
A strong flow of liquefied natural gas (LNG) is also supporting supply outlook in northwest Europe.
“It seems that record-high LNG imports and significant demand destruction levels continue to keep a lid on European gas prices with risks of further downside pressure once storage sites are full which could be the case in certain countries at some point in October at current injection levels,” analysts at Engie’s EnergyScan said.
Britain on Thursday formally lifted a moratorium on fracking for shale gas that has been in place since 2019, saying strengthening the country’s energy supply was an “absolute priority”.
Meanwhile, the European Securities and Markets Authority is expected to set out proposals for easing collateral rules for electricity and gas derivatives due to a liquidity crunch among energy firms unable to find enough cash to cover positions.
In the UK, a cold spell with below normal temperatures is expected next week, which could increase gas demand for heating and further tighten the gas market.
The UK system was under-supplied by 2.1 million cubic metres (mcm) on Thursday, according to National Grid data.
In the European carbon market, the benchmark contract was up by 0.32 euros at 70.11 euros a tonne.