Dutch and British wholesale gas prices extended their decline on Wednesday morning, after falling more than 14% on Tuesday, as the ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding.
The benchmark Dutch front-month contract at the TTF hub fell by 0.47 euros to 35.43 euros per megawatt hour (MWh), or $12.05/mmBtu, by 0850 GMT, LSEG data showed.
The British front-month contract shed 0.67 pence to 82.72 pence per therm.
The two contracts are trading at their lowest levels since June 11, two days before the first Israeli strikes on Iran.
Consultancy Auxilione said that plenty of risk premium has been rapidly removed from price levels, with threats including the closing of the Strait of Hormuz seem to have been set aside for now, allowing the continuation of shipping in the area.
“That said, tensions will still remain at alerted levels. But for now, and whilst the ceasefire holds, the markets can breathe that sigh of relief after rising in the past few weeks as fears of escalation were played out,” Auxilione analysts said.
Meanwhile, the European Union’s member states have reached an agreement with the EU Parliament to loosen the EU’s rules on filling gas storage, following concerns that earlier rules on this risked inflating energy prices.
The deal allows the EU’s member states to achieve this 90% filling target at any point in time between October 1 and December 1, taking into account the start of the member states’ withdrawal period. Once the 90% target is met, it should not be required to maintain that level until 1 December.
For the day ahead, gas demand for power has increased by 64 gigawatt hours per day (GWh/d) to 1,648 GWh/d, likely driven by higher power sector needs. On the supply side, there is robust availability from Norwegian exports and strong LNG sendout, said LSEG analyst Oleh Skrynyk.
“Today, we expect prices to trade sideways with limited upside potential unless new market-moving factors emerge. Supported by ample supply and stable demand fundamentals,” Skrynyk said.
In the European carbon market, the benchmark contract (CFI2Zc1) was down 0.70 euro at 72.84 euros a metric ton.
Source: Reuters