British and Dutch gas prices fell on Wednesday morning as the market continued to interpret news of Russian troop withdrawals from Ukraine’s border as a sign the threat of an invasion was easing.
The British day-ahead gas price fell by 17.00 pence to 156.00 pence per therm by 0858 GMT, while the contract for March was down by 5.50 pence at 159.00 p/therm.
The Dutch contract at the TTF hub for March fell by 6.40 euros to 67.30 euros per megawatt hour (MWh).
Prices fell sharply on Tuesday on claims of Russian troop withdrawals from Ukraine’s border.
On Wednesday, Russia’s defence ministry published a video that it said showed a column of tanks and military vehicles leaving annexed Crimea across a railway bridge after drills, adding that some troops would also return to their permanent bases.
On Tuesday night, U.S. President Joe Biden warned that more than 150,000 Russian troops were still amassed near Ukraine’s borders after Moscow’s announcement of a partial pullback was met with scepticism.
“Prices are down again this morning, trading close to the 20-day low target (66.30 euros/MWh),” said analysts at Engie EnergyScan.
“This level should lend them support, particularly as the latest weather forecasts are pointing to colder weather by the end of February in north-west Europe,” they added.
However, even though European gas stocks have improved slightly they still remain historically low, which should prevent Dutch gas prices from dropping to the average coal parity level for power generation, the analysts said.
North-west Europe local distribution zone demand, mainly used for heating, is forecast at 3,783 gigawatt hours (GWh) per day for the day=ahead, down 107 GWh/day.
However, UK LDZ consumption is forecast to rise by 29 million cubic metres (mcm) to 202 mcm/day for the day-ahead but gas-for-power consumption is forecast slightly lower at 37 mcm/day, Refinitiv Eikon data showed.
The UK gas system was over-supplied by around 11 million cubic metres (mcm).
In the European Union carbon market, the benchmark December 2022 contract CFI2Zc1 fell by 1.29 euros to 89.95 euros a tonne.
Source: Reuters (Reporting by Nina Chestney)