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EUROPE GAS-Dutch month-ahead wholesale gas falls to two-year low

Saturday, 27 May 2023 | 00:00

The Dutch benchmark wholesale gas price touched its lowest level in two years on Friday morning as prices across the energy complex fell in response to news Germany has slipped into recession, along with mild temperatures and healthy supply.

The benchmark Dutch front-month contract TRNLTTFMc1 inched down by 0.35 euro to 25.15 euros per megawatt hour (MWh) by 0803 GMT, having dipped to 24.56 euros/MWh in early trade, its lowest since the third week of May 2021, according to Refinitiv Eikon data.

The Dutch July contract TRNLTTFMc2 was down 1.20 euros at 25.60 euros/MWh, while the September price TRNLTTFMc4 was 0.90 euro lower at 30.45 euros/MWh.

The entire energy complex, including coal, oil and carbon, has weakened due to macroeconomic indicators yesterday suggesting that Germany, Europe’s largest economy, has slipped into recession, analysts at Refinitiv said.

Germany’s gross domestic product fell by 0.3% in the first quarter of the year when adjusted for price and calendar effects, a second estimate from the statistics office showed on Thursday. This follows a decline of 0.5% in the fourth quarter of 2022. A recession is commonly defined as two successive quarters of contraction.

Other factors were also contributing to wholesale gas price falls, including healthy storage levels, a slight rise in gas pipeline supplies from Norway, mild temperatures and an expected increase in liquefied natural gas send-out to north-west Europe after maintenance ends on France’s Dunkirk terminal.

European Union gas demand could fall in the coming 12 months by more than the total volume of gas the EU expects to buy from Russia this year, the European Commission has said.

In a document seen by Reuters, EU energy commissioner Kadri Simson said policies to save energy should reduce EU gas use by 60 billion cubic metres (bcm).

That would exceed the combined volume of gas and liquefied natural gas that the EU expects to import from Russia in 2023.

In the European carbon market, the benchmark contract CFI2Zc1 inched down by 0.28 euro to 82.71 euros a tonne.
Source: Reuters (Reporting by Nina Chestney)

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