The European benchmark gas contract remained near its highest level in 13 months on Tuesday amid colder weather, the decline of storage inventories and as Asian liquefied natural gas (LNG) prices continue to rise.
The benchmark front-month contract at the Dutch TTF hub inched up by 0.25 euro to 48.72 euros per megawatt hour (MWh), or $15.43/mmBtu, by 0917 GMT. It was still at its highest intraday level since Nov. 6, 2023.
In Britain, the day-ahead contract gained 0.50 pence to 121.25 pence/therm.
Temperatures in north-west Europe are forecast to drop from this weekend onward, LSEG data shows.
Gas demand for power is accordingly forecast to rise by 297 gigawatt hour per day (GWh/d) to 3,604 GWh/d with wind speeds also expected to weaken on Wednesday.
Demand over the weekend and the working days next week is also expected to be up by 26-27 GWh/d each, said LSEG analyst Yuriy Onyshkiv.
Meanwhile, the price spread between European and Asian markets starts to widen, consultancy Auxilione said in a morning note.
“For some time now, European prices have been attractive for LNG cargoes, but Asian demand has started to increase – as has the market price – which may start to attract some cargoes initially intended for Europe to divert,” Auxilione said.
Russian gas producer Gazprom said it would send 41.3 million cubic metres (mcm) of gas to Europe via Ukraine on Tuesday, up from 40.8 mcm on Monday but still down from more than 42 mcm/day seen in recent months.
Europe’s gas inventories have been depleting at the fastest rate for eight years, as the region has experienced repeated bouts of colder-than-normal temperatures and low wind speeds since the start of the winter heating season, energy analyst John Kemp said in a LinkedIn post.
“Stocks have fallen more than four times faster than the average over the last ten years, and by the most for any year since 2016, according to data from operators compiled by Gas Infrastructure Europe (GIE),” Kemp said.
Storage facilities across the region were 87% full on average, sharply lower than 97% on the same date in 2023 and 94% in 2022, he added.
In the European carbon market CFI2Zc1, the benchmark contract was down by 0.58 euro at 68.28 euros a metric ton.
Source: Reuters (Reporting by Marwa Rashad; editing by Nina Chestney)