British and Dutch gas prices fell on Monday as gas-for-power demand decreased due to stronger wind output and an outlook for higher temperatures.
The Dutch day-ahead contract TRNLTTFD1 was down by 5.50 euros at 86.90 euros per megawatt hours (MWh) by 1025 GMT, while the February contract TRNLTTFMc1 was down by 5.50 euros at 86.70 euros/MWh.
In Britain, the day-ahead contract TRGBNBPD1 was down by 13.00 pence at 208.00 pence per therm and the contract for immediate delivery TRGBNBPWKD went down by 10.00 pence to 210.00 pence per therm.
Analysts at Refinitiv said that in Europe, heating demand is relatively stable, while gas-for-power forecast is softer due to stronger renewables output.
Refinitiv data showed that higher wind output will reduce gas-for-power demand in both Britain and Europe next week.
UK’s National Grid said that on Saturday wind generated 51.8% of British electricity, more than nuclear at 15.1%, gas at 15.0%, solar at 1.4%, and coal at 1.2%.
“An upward revision in temperature forecasts for the end of the week could weigh on prompt and near-curve contracts today amid strong wind speeds. On the supply side, Norwegian gas production is back at capacity level as the unplanned outage affecting Troll ended over the weekend,” said Engie’s EnergyScan in a morning note.
European gas demand is expected to decline this year as continued high prices make coal more competitive for power generation, while Asian demand growth could slow, the International Energy Agency (IEA) said on Monday.
Gas flows from Germany to Poland via the Yamal-Europe pipeline, which usually sends Russian gas westwards into Europe, were steady over the weekend and on Monday morning, data from German network operator Gascade showed.
Concerns over a potential Russian invasion to Ukraine and a subsequent gas supply disruption still dominates sentiment.
However, Refinitiv analysts expect energy markets to calm down a bit over the week as with Russian President Putin heading to Beijing to join Winter Olympic opening ceremony this Friday, it is most likely that any form of severe escalation at the Ukraine/Russia border might not happen before his return later this week.
In the European carbon market, the benchmark 2022 price CFI2Zc1 inched down by 0.85 euro to 88.37 euros a tonne.
Source: Reuters (Reporting By Marwa Rashad; Editing by Nina Chestney)