Dutch and British wholesale gas prices rose marginally in a technical rebound on Wednesday after hitting a two-month low in the previous session, amid weather forecasts in line with the seasonal norm and strong supply.
The Dutch January contract rose by 1.05 euro to 39.20 euros per megawatt hour (MWh) by 0913 GMT, LSEG data showed.
On Tuesday, the contract briefly hit 37.08 euros/MWh, its lowest level since Oct. 6.
The potential for a technical rebound remains on the cards, LSEG analyst Wayne Bryan said in a morning report.
“However, the current environment is notably bearish with more than ample supply comfortably managing high levels of demand and no significant cold spell in sight before year-end,” he added.
European gas storage inventories were last seen at 93.3% full, coming off record highs and slowly converging with levels seen in 2019, according to latest data from Gas Infrastructure Europe.
Abundant liquefied natural gas (LNG) supply is also pressuring prices, said Daniel Hynes, senior commodity strategist at ANZ bank.
“Congestion at the Panama Canal means more U.S. LNG cargoes are opting to land in Europe rather than face delays trying to get to Asia,” Hynes added.
With coal prices also falling recently, the coal switching average level at which gas would become more competitive for power generation was at 36.70 euros/MWh, a support level for gas prices, according to analysts at Engie Energyscan.
The Dutch day-ahead gas contract was up by 0.48 euro at 38.58 euros/MWh.
The British equivalent was up by 1.00 pence at 95 pence per therm.
A small rise in heating demand for Thursday was offset by lower gas-for-power demand amid rising renewables output, LSEG’s Bryan said.
Peak wind power generation in Britain was forecast at 13.6 gigawatts (GW) on Wednesday, rising to 18.6 GW on Thursday, out of the total metered capacity of about 23 GW, Elexon data showed.
In the European carbon market, the benchmark contract CFI2Zc1 gained 0.19 euro to 68.83 euros a metric ton. The contracthit a fresh 13-month low of 68.41 euros/MWh on Tuesday.
Source: Reuters (Reporting by Nora Buli in Oslo; Editing by Eileen Soreng)