EU carbon prices higher as cold snap boosts demand

* Cold weather forecast this week boosts EUA demand

* Benchmark EUAs could end 2010 above 18 eur/t

LONDON, March 8 (Reuters) - European carbon emissions futures were slightly higher on Monday, extending Friday's late gains as the return of very cold weather gave a boost to energy prices, traders said. EU Allowances for December delivery CFI2Zc1 gained 10 cents or 0.75 percent at 13.40 euros ($18.34) a tonne at 0757 GMT, with light volume at 485 lots.

EUAs ended Friday's trade higher following earlier losses, due to a renewed cold snap which has boosted demand for electricity generation and thereby carbon permits.

Oil CLc1 extended gains towards $82 a barrel, buoyed by a weaker dollar and signs of an economic recovery in the United States. [O/R]

Prompt British gas prices GA2NB were up 0.30 percent at 33.00 pence per therm.

As utilities bank EUAs for future use from the third phase of the EU's Emissions Trading Scheme (2013-2020) when prices are expected to be higher, they are more focused on buying rather than selling, traders said.

"The CO2 market could become a cornered market, with no sellers due to the banking strategies from the third phase," said Jean-Francois Cauvet at Paris-based COER2 Commodities.

Companies who 'corner the market' buy up a large amount of a commodity, potentially selling it for profit later.

"This situation could push the contract over 18 euros before the end of 2010," he said.

Certified emissions reductions CEREZ0 were slow to trade.

(Reporting by Nina Chestney; Editing by Keiron Henderson)