Europe’s benchmark gas contract hit its lowest for 19 months as expectations of strong output from wind farms and milder temperatures curbed demand.

The front-month contract at the Dutch TTF hub was down 3.10 euros at 40.30 euros per megawatt hour (MWh) by 0923 GMT, Refinitiv Eikon data shows.

The benchmark earlier touched 39.80 euros/MWh for its lowest since July 2021.

Average temperatures in northwest Europe were forecast at 8.4 degrees Celsius and 9.4 C for Monday and Tuesday respectively, Refinitiv Eikon data showed, up 0.5 C and 0.7 C from previous expectations.

“If fundamentals remain unchanged in the short term, TTF month-ahead prices have downward potential towards the minimum coal switching level (currently around 30euros/MWh),” Engie EnergyScan analysts said on Monday.

The coal switching level is the point at which the margins from power generation from gas are more profitable than those for coal-fired generation.

The lower demand allowed increased injections into Europe’s gas storage sites.

European gas storage sites were 55.7% full on March 18, the latest data from Gas Infrastructure Europe shows, up 0.02% from the previous day.

In Britain the day-ahead contract TRGBNBPD1 fell by 10 pence to 91.50 p/therm.

“The latest (model) shows a decrease of 19 mcm (million cubic metres/day) in gas for power demand on the back of much faster windspeeds on DA (day ahead),” Refinitiv analyst Tim Crump said in a daily research note.

Peak wind power generation in Britain was forecast at 12.2 gigawatts (GW) on Monday, rising to 15.9 GW on Tuesday, Elexon data showed.

Britain’s gas system was oversupplied on Monday, with demand forecast at 298.4 mcm and supply at 305.6 mcm, National Grid data showed.

In the European carbon market, the benchmark contract CFI2Zc1 was 0.47 euros down at 88.73 euros a tonne.
Source: Reuters (Reporting by Susanna Twidale Editing by David Goodman)