Wholesale British and Dutch gas prices largely eased on Wednesday morning after surging the previous day on outages at Norwegian gas infrastructure, though forecasts of low wind and hot weather supported some contracts.
The Dutch benchmark front-month contract was 1.83 euros down at 34.30 euros per megawatt hour (MWh) by 0905 GMT, having hit a five-week high of 36.30 euros/MWh on Tuesday.
The Dutch day-ahead contract was down 1.65 euros at 34.10 euros/MWh.
Operator Shell had extended a maintenance outage at the Nyhamna gas processing plant by 25 days to July 15, citing cooling system issues. That led to extensions to outages at the Aasta Hansteen and Ormen Lange gas fields feeding the plant.
The lost production equalled about 13 terawatt hours (TWh) of possible injections, or 2.5% of European storage, said Refinitiv analyst Ulrich Weber.
“The impact on the short-term balance is limited,” he added.
Later on Wednesday Equinor EQNR.OL is expected to restart its Norwegian liquefied natural gas plant in Hammerfest, which has been shut down for two weeks because of a gas leak.
The market seems to have over-reacted to Tuesday’s Norwegian news, with Europe’s energy supplies not under threat, said Norbert Ruecker, head of economics and next generation research at bank Julius Baer.
“Storage remains ample, industrial demand soft and gas-fuelled electricity generation depressed. We expect prices to fall back into depression this summer,” his note added.
European gas storage is currently 72.6% full, according to Gas Infrastructure Europe.
Given the ample storage levels, Europe actually needs reduced inflows to avoid hitting capacity constraints in late summer and early autumn, Ruecker said.
In Britain, the front-month contract TRGBNBPMN3 was down 3.25 pence at 87.25 pence per therm while the day-ahead contract TRGBNBPD1 surged 15 pence to 87.00 p/therm.
High temperatures and coming low wind power production should boost demand for gas for power generation in the coming days, Refinitiv’s Weber said.
In the European carbon market, the benchmark contract CFI2Zc1 rose by 2.28 euros to 92.18 euros a tonne.
Source: Reuters (Reporting by Nora Buli in Oslo Editing by David Goodman)