December 22, 2016 / 10:15 AM / 2 years ago

UK GAS-Prices edge higher on weak sterling

* Sterling hits two-week low against euro

* Carbon prices rise on auction pause

LONDON, Dec 22 (Reuters) - British wholesale gas prices rose on Thursday, as a weaker sterling against the euro helped lift the market in thin holiday trade.

The day-ahead contract was up 0.38 pence at 46.13 pence/therm at 0947 GMT.

Traders said the gas system was expected to be oversupplied but the dip in the British currency had buoyed prices.

Sterling fell to a two-week low against the euro after a survey of British consumers showed a gloomy view of the economy’s prospects next year.

A weaker pound can be bullish for UK gas prices since it makes British gas products less expensive for traders in continental Europe.

One gas trader said gains in the European carbon market had also contributed to stronger gas prices.

The benchmark Dec-17 carbon contract rose by 0.20 euro to 6.02 euros a tonne.

Carbon has risen around 20 percent this week, buoyed by a traditional pause in government auctions of permits over the holiday period, limiting supply.

Traders said prices were also pushed higher by technical buying as the contract moved through key resistance such as the 200-day moving average, although trading volumes have been thin.

Further along the curve, gas prices also rose, with the summer 17 contract up 0.70 pence at 43.75 pence per therm.

In the Netherlands, the day-ahead gas price at the TTF hub fell by 0.05 euro to 17.90 euros per megawatt-hour. (Reporting by Susanna Twidale; Editing by Dale Hudson)

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