EUROPE GAS-Prices up in volatile trade ahead of Nord Stream outage

Dutch and British forward wholesale gas prices rose on Friday, reversing earlier profit-taking in a volatile session dominated by supply concerns.

The Dutch contract for October delivery, was up 5.98 euros at 321.48 euros per megawatt hour (MWh) by 1238 GMT, while the November price was 7.34 euros higher at 326.04 euros/MWh. The British September contract was down 26.00 pence at 555.00 pence per therm, but all other contracts rose, with October up 7.25 p at 653.25 p/therm.

Prices fell in early profit taking before rising as low liquidity drove volatility ahead of a bank holiday weekend in Britain, where markets will be closed on Monday. One trader said no single driver explained the move higher on Friday and that a handful of players could have been responsible.

"Supply concerns are at the forefront of people's mind, but there's nothing new," he added. Norbert Rücker, head of Economics and Next Generation Research at investment bank Julius Baer, said: "The ferocity of price moves suggests that extreme fear and panic are at play, which has rarely been an element that influenced prices lastingly, i.e. over months."

The supply concerns are focused around a three-day maintenance outage at the Nord Stream 1 pipeline from Russia to Germany as traders anticipate gas flows may not be restored afterwards. Gazprom will halt natural gas supplies to Europe from Aug. 31 to Sept. 2, piling pressure on the region as it seeks to refuel ahead of winter.

Europe's gas storage sites were just over 78% full, Gas Infrastructure Europe data showed, approaching a European Commission target of 80% by Oct. 1. Norwegian supply is expected to fall to its lowest levels this year in September because of a heavy maintenance schedule.

Another trader said Norway had sufficient flows to cover day-to-day demand, adding that September should be a month of relatively low consumption. In Britain, the contract for immediate delivery was up by 20.00 pence at 550.00 pence per therm, and the contract for day-ahead delivery rose by 20 p to 545 p/therm.

The UK system was 6.3 million cubic metres short on Friday, data from National Grid showed. On the European carbon market, the benchmark contract inched 0.55 euros lower to 88.76 euros a tonne.