Dutch and British wholesale gas prices rose to their highest in more than six weeks on Wednesday, supported by lower supply from Norway, competition for liquefied natural gas and worries about Ukraine peace talks and unrest in the Middle East.

The benchmark Dutch front-month contract was up 0.48 euros at 37.63 euros per megawatt hour by 0813 GMT, its highest level since April 7, LSEG data showed.

The British contract for June rose by 1.29 pence to 90.31 pence per therm, the highest since April 4, while day-ahead gas was up 0.70 pence at 90.50 p/therm.

Heavy maintenance in Norway has supported prices this week, but other reasons for the steep rise remain less clear, a trader said, arguing people may find it tough to gauge demand from Asia and China this summer.

Europe and Asia compete in the LNG global market.

Asian LNG prices have mostly traded at a premium to European gas prices in recent months, analysts at ING said in a morning note.

Norwegian gas flows to Britain and Europe plunged to 160 million cubic metres per day on Wednesday, just half of usual volumes, amid planned one-day outages at the Troll field and Kollsnes processing plant, data from infrastructure operator Gassco showed.

However, barring any extension, flows should recover on Thursday, LSEG analyst Oleh Skrynyk said.

A lack of progress in Russia-Ukraine peace talks also provided support, analysts said.

Reports that Israel might be planning a strike on Iran lifting oil prices could also have triggered a stronger move in the gas market than fundamentals justify, Karsten Sander Nielsen, senior market analyst at Mind Energy said.

“Growing Middle East unrest has also impacted European gas over the last few years and we have seen the markets react strongly the last times Israel and Iran have been fighting,” he added.

In the European carbon market, the benchmark contract (CFI2Zc1) eased by 0.09 euro at 73.09 euros per metric ton.
Source: Reuters