Dutch and British wholesale gas prices fell on Thursday morning amid softer demand and higher wind and solar output forecasts, but prices could be sensitive to energy policy shifts as Donald Trump takes up the U.S. Presidency next week.
The benchmark front-month contract at the Dutch TTF hub (TRNLTTFMc1) inched down by 0.80 euro to 46.20 euros per megawatt hour (MWh), or $13.94 per mmBtu, by 0933 GMT, according to LSEG data.
The Dutch day-ahead contract was 0.88 euro lower at 46.40 euros/MWh.
In Britain, the day-ahead (TRGBNBPD1) contract was 1.50 pence higher at 118.00 pence per therm.
Gas-for-power demand is forecast to be weaker on the day ahead, thanks to improvements in wind and solar forecasts, with wind speeds expected to be higher from Friday until Jan 24 and solar output revised higher until Jan 22, said LSEG analyst Wayne Bryan.
“Geopolitical concerns, outages and weather revisions will continue to provide volatility on the TTF,” Bryan said.
On the bullish side, temperature forecasts for north-west Europe are expected to be lower than previous forecasts at the weekend. Temperatures are expected to fall back below normal levels from Jan 17-22, LSEG data showed.
In the United States, front-month gas prices at the Henry Hub have been creeping up for several months and are close to $4.00, consultancy Auxilione said in a morning note, adding that the last time they did this was in 2021 at the start of the energy crisis.
The inauguration of President Donald Trump will take place on Monday. Europe relies heavily on U.S. LNG exports in replacement of Russian pipeline gas.
“Decisions Trump makes in the coming weeks – both in relation to direct energy policy such as LNG export plans but also those of political influence on other countries such as bringing the Ukraine conflict to an end – may cause some volatility to energy markets,” Auxilione analysts said.
According to sources on Wednesday, Trump plans to make it easier for some U.S. producers of LNG to seek export permit renewals.
Trump will likely include the change in an executive order on LNG that he will issue on his first day in office, the sources said. Trump, who takes office on Monday, has said he would issue an LNG order on day one that would end the pause on approvals for new LNG projects that outgoing President Joe Biden put in place in January last year.
This could help bring more U.S. LNG exports to market.
In the European carbon market (CFI2Zc1), the benchmark contract was down 0.10 euro at 77.92 euros per metric ton.
Source: Reuters