British and Dutch wholesale gas mostly fell on Wednesday morning as low demand and mild weather continued to weigh on prices, keeping them near almost one and a half-year lows.
The British within-day contract fell by 2.90 pence to 158.10 p/therm by 0934 GMT, while the day-ahead contract slipped by 5.00 p to 155 p/therm, according to Refinitiv Eikon data.
The Dutch front-month contract was down 3.50 euros at 66.50 euros per megawatt hour (MWh), close to 17-month lows.
The benchmark Dutch contract has fallen almost 10% since the start of the year.
Europe gas demand remains particularly weak since the beginning of the year: no rebound in the industrial sector, low gas-fired generation due to weak power demand…as well and low heating demand due to mild weather,” said analysts at Engie EnergyScan.
High levels of gas inventories also kept prices lower. Europe’s gas storage sites were 83% full, according to the latest data from Gas Infrastructure Europe.
“A warmer-than-normal winter has already helped energy prices to fall in recent months … with European gas storage remaining at comparatively high levels,” said Vicky Parker, analyst at PwC UK.
“However, gas and power prices are expected to remain volatile and above seasonal average levels.”
Analysts at Goldman Sachs said this winter’s risks are largely over, with a colder-than-average temperature peak for the rest of this winter mostly ruled out.
But the milder weather’s effect on Euruopean gas prices has driven them below Asian spot liquefied natural gas (LNG) prices.
“This incentivizes LNG suppliers to increase deliveries to the Pacific Basin at the expense of Europe. Accordingly, we lower our expected Jan-April 2023 north-west European LNG imports from being up 9 million cubic metres (mcm) a day year-on-year to down 18 mcm/d y-o-y, at 222 mcm/d,” they said.
The schedule for liquefied natural gas (LNG) cargoes coming to Europe remains busy for the coming weeks, but high wind speeds have delayed some cargoes entering Britain, limiting send-out from South Hook and Dragon terminals.
Peak wind generation was expected at around 18.5 gigawatts (GW) on Wednesday, falling to to 16 GW on Thursday, out of a total metered capacity of more than 22 GW, Elexon data showed.
Eastbound gas flows on the Yamal-Europe pipeline to Poland from Germany and flows of Russian gas to Europe via Ukraine remained stable on Wednesday morning, pipeline operator data showed.
In the European carbon market, the benchmark contract was almost unchanged at 80.46 euros a tonne.
Source: Reuters (Reporting by Bozorgmehr Sharafedin; editing by Nina Chestney)