Dutch and British gas prices dropped on Tuesday morning, with the benchmark contract hitting an almost one and a half-year low as high levels of gas inventories put pressure on prices.
The Dutch front-month contract TRNLTTFMc1, a European benchmark, was down 3.40 euros at 53.10 euros per megawatt hour (MWh) by 0944 GMT, its lowest level since early September 2021, according to Refinitiv Eikon data.
The British within-day TRNLTTFMc1 contract fell by 1.50 pence to 141.50 p/therm, while the front-month contract TRGBNBPMc1 slipped by 2.25 p to 135.00 p/therm, according to Refinitiv Eikon data.
Swiss bank UBS revised down its European gas price forecast for 2023, cutting TTF by around 50% to 80 euros/MWh.
“As European gas inventories remain high, thanks in large part to the mild winter, we see a much lower risk premium than previously,” the bank said in a note on Tuesday.
“We expect prices to remain close to current levels for the next 18 months as the global gas market remains tight.”
Europe-wide gas storage sites were 81.5% full, according to Gas Infrastructure Europe data.
Analysts at Engie EnergyScan said the gas price drop has not yet led to an increase in gas demand for power generation.
“The strong gas price decline, even if it makes gas-fired power plants increasingly competitive with coal-fired power plants, does not lead to an increase in gas demand for power generation because most gas-fired power plants are still outside the merit order.”
Meanwhile, eastbound gas flows on the Yamal-Europe pipeline to Poland from Germany and flows of Russian gas to Europe via Ukraine fell on Tuesday morning, data from pipeline operators showed.
Norwegian gas nominations to Britain also dropped to 76 million cubic metres (mcm) per day on Tuesday compared with 94 mcm the day before, due to planned outages that will continue until next week, Refinitiv analysts said.
The British gas system was around 30 mcm under-supplied, National Grid data showed.
In the European carbon market, the benchmark contract CFI2Zc1 was almost unchanged at 77.41 euros a tonne.
Source: Reuters (Reporting by Bozorgmehr Sharafedin Editing by Susanna Twidale)