Dutch and British wholesale gas prices edged higher on Monday morning on concerns over Middle East conflict escalation as Israel steps up attacks in Lebanon and Yemen, but strong storage inventories limit further upside potential.

The benchmark front-month contract at the Dutch TTF hub was up 0.77 euro at 38.88 euros per megawatt hour (MWh), or $12.68 mmBtu, by 0823 GMT, LSEG data showed.

The November contract was up 0.50 euros at 39.15 euros/MWh.

In the British market, the front-month contract was 1.76 pence higher at 39.50 pence per therm.

Israel’s increasing frequency of attacks against the Hezbollah militia in Lebanon and the Houthi militia in Yemen have prompted fears that Middle East fighting could spin out of control and draw in Iran and the United States, Israel’s main ally.

“With continued escalations in the Middle East, which show no signs of abating, markets remain nervous and remain elevated,” consultancy Auxilione said in a morning note.

Meanwhile, analysts at Engie’s EnergyScan said that below-normal temperatures, the slow ramp-up in Norwegian supply and concerns about LNG supply continued to lend support to the market.

“Additional price increases were likely but with EU gas stocks still comfortable, the potential for further price increases seems limited,” they added.

Temperatures across Northwest Europe will edge up on the day ahead and are expected to remain roughly sideways throughout the week, LSEG data showed.

Total exports from Norway are up 18 million cubic metres per day (mcm/d) at 224 mcm/d, LSEG data showed.

Russia’s Gazprom GAZP.MM said it will send 42.4 million cubic metres of gas to Europe via Ukraine on Monday, compared with 42.3 mcm on Sunday.

European storages are currently 94.18% full, Gas Infrastructure Europe data showed.

In the European carbon market, the benchmark EU carbon permit contract CFI2Zc1 was up 0.09 euro at 66.42 euros per metric ton.
Source: Reuters (Reporting By Marwa Rashad; editing by Susanna Twidale)