Dutch and British gas contracts rose on Monday morning as cold weather is driving up gas demand for heating and is also likely to trigger greater withdrawals from gas storage sites.

The benchmark Dutch front-month contract at the TTF hub (TRNLTTFMc1) was up 0.64 euro at 31.64 euros per megawatt hour (MWh), or $10.76/mmBtu, by 0849 GMT, LSEG data showed.

It marks the highest intraday level in 10 days.

British day-ahead gas prices (TRGBNBPD1) were 1.25 pence higher at 82 pence per therm, while the front-month gas contract (TRGBNBPMc1) lifted by 0.26 pence to 82.90 p/therm.

“Our outlook today is bullish mainly due to the spike in residential demand driven by the cold spell,” said LSEG analyst Yuriy Onyshkiv.

Local distribution zone demand, which largely reflects gas consumption for heating, will almost double in Britain as temperatures drop from 10.5 degrees Celsius last week to 3.34C this week, he added.

With no additional flows expected from Norway and liquefied natural gas supply already quite robust, the overall system balance should tighten and see gas storages start depleting over the next two weeks, Onyshkiv said.

EU gas storage sites were last 82.02% full, compared with 91.27% at the same time last year, Gas Infrastructure Europe data showed.

Meanwhile, the significant increase in U.S. gas prices at Henry Hub NG1!, which have risen nearly 40% over the past month, also posed an upward risk for prices, Arne Lohmann Rasmussen, chief analyst at Global Risk Management, said in a note.

The U.S. is a major exporter of LNG to Europe, linking the two markets.

This meant that Henry Hub could soon set the low for TTF prices, reflecting the level where it will not be economically viable to produce and ship LNG to the EU anymore, Rasmussen said.

Meanwhile, Ukraine secured imports of U.S. LNG via Greece to cover its winter needs from December through to March next year, it said on Sunday.

In the European carbon market, the benchmark contract (CFI2Zc1) was down 0.24 euro at 80.69 euros a metric ton.
Source: Reuters