Dutch and British gas prices edged up on Wednesday morning amid supply concerns due to outages at some liquefied natural gas (LNG) facilities and growing Asian demand pulling cargoes from Europe.
The benchmark front-month contract at the Dutch TTF hub TRNLTTFMc1 inched up by 0.90 euro to 35.18 euros per megawatt hour (MWh), or 10.99 USD/mmBtu, by 0849 GMT, according to LSEG data.
In the British market, the day-ahead contract TRGBNBPD1 was up 2.00 pence at 84 pence per therm and the front-month TRGBNBPMc1 contract was up 1.52 pence at 82.6 p/therm.
“European gas futures have edged higher as the supply outlook tightened. Despite nearly full inventories, consumers in the region will have increased competition for LNG shipments in the coming months, exacerbated by disruptions on the remaining gas flowing through Russian pipelines,” Daniel Hynes, senior commodity strategist at ANZ bank, said in a research note.
On Tuesday, Chevron CVX.N suspended production at its Wheatstone gas facility in Australia to complete repairs to the platform’s fuel gas system, a company spokesperson said.
Wheatstone’s top customers in 2024, based on LSEG’s supply data available so far this year, were Japan and South Korea, followed by China and Taiwan.
Severe heatwaves across India, Bangladesh, south-east Asia and south China have also boosted gas consumption by generators to meet air-conditioning and refrigeration demand, pulling more LNG away from Europe.
Since the summer of 2023, northeast Asia’s LNG buyers have been prepared to pay a premium over their counterparts in north-west Europe, but the premium has increased significantly since the end of winter 2023/24.
Spot LNG prices were trading at a six-month high, slightly over $12 per million British thermal units (mmBtu), which is $1 above the gas price at the TTF hub.
Europe’s buyers are likely to remain relatively inactive for several more months given that inventories are still well above normal.
European gas storage facilities were last seen 72.14% full, according to Gas Infrastructure Europe (GIE) data.
Meanwhile, temperatures across the continent are now on the rise and demand should drop, which should add some bearish sentiment and allow for more storage injections, said LSEG analyst Saku Jussila.
In the European carbon market, the benchmark contract CFI2Zc1 inched up by 0.27 euro to 70.90 euros a metric ton.
Source: Reuters (Reporting By Marwa Rashad; Editing by Nina Chestney)