British and European wholesale gas prices fell on Wednesday morning as expectations of higher output from wind farms curbed power plant demand for gas.

The British within-day gas contract was down 7.00 pence at 173.00 p/therm by 0935 GMT.

The British day-ahead contract was down 7.50 pence at 175.00 p/therm.

Peak wind power generation was forecast at 10.4 gigawatts (GW) on Wednesday rising to 12.8 gigawatts (GW) on Thursday, Elexon data showed.

Higher wind output typically reduces gas demand from power plants.

Britain’s gas system was over-supplied on Wednesday, with demand forecast at 121.3 million cubic metres (mcm) and supply forecast at 148.5 mcm, National Grid data showed.

Analysts at Refinitiv forecast demand for gas from power stations at 38 mcm from Wednesday, down 13 mcm on the previous forecast.

Traders said that despite some respite this week, prices remain near record highs with long-term fundamentals such as weak stock levels and low imports of liquefied natural gas still weighing on the market.

HSBC analysts said they have increased their gas price forecasts substantially in light of the recent bull run and extreme tightness in the global gas market.

“With little new gas/LNG supply coming in the near term and consumption about to rise sharply in the winter, we expect gas prices to remain at exceptionally high levels this winter in the $15-20/mmBtu range with risks skewed to the upside in the event of a cold winter,” they said.

“Prices should remain elevated next summer before normalising in 2023,” they added.

The British October gas price was down 8.75 pence at 178.00 p/therm.

The October gas price at the Dutch TTF hub, a European benchmark, TRNLTTFMc1 was down 1.95 euros at 70.70 euros per megawatt hours (MWh) or around $24/mmBtu.

The benchmark Dec-21 EU carbon contract CFI2Zc1 was down 0.06 euro at 60.09 euros per tonne.

The benchmark Dec-21 British carbon contract UKAFMc1 was down 0.28 pounds at 55.50 pounds per tonne.