EUROPE GAS-Prices decline on strong supply, high storage levels

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- Dutch wholesale gas prices inched down on Friday morning due to continued strong supply and high storage levels.

The benchmark front-month contract TRNLTTFMc1 at the Dutch TTF hub was down 0.95 euro at 32.20 euros per megawatt hour (MWh) by 1020 GMT, LSEG data showed.

The February contract TRNLTTFMc2 was 0.70 euro lower at 33.10 euros/MWh.

"European underground storage levels were at 100.10 billion cubic meters (bcm) or 87.1% full as of Dec. 25, which is higher than the 93.81 bcm or 83% on the same date last year," said Rystad Energy senior analyst, Lu Ming Pang.

This was also close to the five-year maximum of 101.76 bcm from 2018 to 2022.

Although lower-than-normal temperatures are expected after the first week of January, the winter on average has been milder than usual so far, with existing gas pipeline and underground storage supplies at high levels, even compared to last year, she added.

Analysts at consultancy Timera Energy said the Dutch month-ahead contract has fallen over 30% since the end of October due to the mild start to winter and robust supply of pipeline gas from Norway and liquefied natural gas.

"Despite heading into 2024 with several bullish risks, such as geopolitical tensions, infrastructure challenges and weather-related uncertainties surrounding the temperature outlook in Q1, the near-record level of gas in storage approaching the new year is mitigating the risk premium in the 2024 curve," they added.

In the British gas market, the month-ahead price TRGBNBPMF4 fell by 1.51 pence to 82.00 pence per therm.

In the European carbon market, the benchmark contract CFI2Zc1 edged up by 0.10 euro to 80.30 euros per metric ton.

(Reporting by Nina Chestney)


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