September 19, 2019 / 9:32 AM / a month ago

UK GAS-Prices rise on French power strike, system undersupply

LONDON, Sept 19 (Reuters) - British prompt gas contracts rose on Thursday, pushed up by stronger gas-for-power demand and a drop in French power output due to a strike.

* Day-ahead gas rose 1.50 pence to 26.50 pence per therm at 0920 GMT.

* Within-day gas was up by 1.90 p/therm at 26.90 p/therm.

* The UK gas system was undersupplied by 10.4 million cubic metres (mcm), with demand forecast at 184.7 mcm and supply at 174.3 mcm, National Grid data showed.

* Undersupply is due to high gas-for-power demand which is expected to be at around 59 mcm on Thursday and forecast to drop to 39 mcm on Friday, Refintiv data showed.

* High gas-for-power demand on Thursday is a result of low wind generation. Peak wind production is forecast to be at 1.1 gigawatts (GW) out of 12.1 GW of wind capacity. This will jump to near 8 GW on Friday, according to Elexon data.

* Gas prices in Europe were also supported by news of French power generation being cut by 9% on Thursday morning, on the second day of a nationwide strike by workers at utility EDF.

* The strike, scheduled to end on Thursday evening, has reduced power generation at several nuclear, hydro and gas fired power plants.

* France is a net power exporter in Europe, meaning there may be need for more gas across the continent to replace some of French power imports.

* Russia’s flows via the OPAL pipeline to Europe remain robust, however, with net Russian gas in northwest Europe insignificantly lower compared to flows before the ruling requiring Gazprom to reduce flows last week.

* Gazprom started to reduce OPAL flows on Saturday after a top EU court curtailed the Russian gas giant’s access to the pipeline based on antitrust regulations.

* Russia, Ukraine and the European Union are holding talks in Brussels on Thursday discussing the Russia-Ukraine gas transit agreement which is due to expire in January.

* Gas contracts for the first quarter 2020 delivery in Europe have a premium as traders price in a possible risk of no-deal, however it is still not clear what Russia and Ukraine may agree on.

* The UK October gas contract rose 1.79 pence to 34.30 pence per therm.

* Day-ahead gas at the Dutch TTF hub up by 0.10 euros at 9.65 euros per megawatt hour.

* The Dutch month-ahead contract rose by 0.45 euro to 13.15 euros per megawatt hour.

* The benchmark Dec-19 EU carbon contract rose by 0.20 euro to 25.65 euros a tonne. (Reporting by Ekaterina Kravtsova; editing by David Evans)

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