Dutch and British wholesale gas prices eased on Tuesday amid more wind power and steady Norwegian supply, but geopolitical tensions continue to add support, keeping contracts near their highest levels this year.
The benchmark front-month contract TRNLTTFMc1 at the Dutch TTF hub was down 1.29 euros at 39.61 euros per megawatt hour (MWh) by 0834 GMT, LSEG data showed.
The British day-ahead price was 2.75 pence lower at 97.25 pence per therm, while the British front-month TRGBNBPMc1 was down 0.99 pence at 99.85 p/therm.
Peak wind generation in Britain is set to rise from 11.9 gigawatts (GW) on Tuesday to 15.5 GW on Wednesday, according to Elexon data.
Local distribution zone (LDZ) demand, which mostly reflects heating, was up 10 million cubic metres (mcm) per day for the day-ahead due to colder forecasts, LSEG data showed.
Norwegian gas flows to Britain rose 5 mcm/d compared with Monday. NG/NO
“Despite the relatively soft fundamental position, we expect volatility and price swings to continue in the context of a simmering geopolitical backdrop,” LSEG analyst Wayne Bryan said in a morning report.
The risk from geopolitical uncertainty in the Middle East and Ukraine remain firmly in play, while strong revisions to Norwegian gas maintenance schedules posed an additional risk, he added.
Ukrainian Prime Minister Denys Shmyhal confirmed Ukraine has no plans to extend a gas transit deal with Russia after it expires at the end of the year.
There is also concern transit could stop before then amid attacks on energy infrastructure, analysts said.
Higher prices in Europe are attracting more liquefied natural gas (LNG) to the region, with three LNG tanker from the U.S. changing course after initially heading to Asia, said Daniel Hynes, senior commodity strategist at ANZ.
Meanwhile, Britain’s electricity and gas grid operators expect sufficient supplies this winter, with more power imports and domestic generation available than last year and high gas storage levels in Europe.
In the European carbon market, the benchmark EU carbon permit contract CFI2Zc1 eased 1.27 euro to 60.49 euros per metric ton.
Source: Reuters (Reporting by Nora Buli in Oslo; Editing by Susanna Twidale)