Dutch and British wholesale gas prices softened slightly on Tuesday morning on forecasts for higher wind generation and increased Norwegian supply but colder weather to come could still lift prices.

The benchmark front-month contract at the Dutch TTF hub was 0.26 euro lower at 35.95 euros per megawatt hour (MWh) by 0823 GMT, while the November contract inched down by 0.06 euro to 36.70 euros/MWh, LSEG data showed.

In the British market, the front month was 0.95 pence lower at 86.20 pence per therm.

Prices had increased on Monday due to colder weather forecasts for the start of October and extensions to some Norwegian maintenance outages.

The forecast for local distribution zone demand (mainly for heating) in north-west Europe is 109 gigawatt hours per day (GWh/d) higher for the day-ahead, according to LSEG data.

On the bearish side, higher Norwegian exports are also expected tomorrow due to the end of an outage at the Karstoe gas processing plant and there is increased wind power generation also forecast for this week.

THE weather will still likely be the dominant factor affecting the day-ahead price today, LSEG gas analyst Tomasz Marcin Kowalski.

Europe needs to fill its gas storage to near 100% by the start of winter around November to minimise price volatility, analysts at Morgan Stanley said.

However, the inventory fill rate has recently fallen to a multi-year seasonal low, principally driven by low liquefied natural gas (LNG) imports compared to last year as arbitrage economics for U.S. LNG are still more favourable to Asia than to Europe.

“We think this focus on filling storage and securing winter LNG supplies will keep European gas prices supported in the high 30s (euros/MWh),” they added.

European storage levels are currently near 94% of capacity, according to Gas Infrastructure Europe data.

In the European carbon market, the benchmark contract CFI2Zc1 inched up by 0.28 euro to 64.38 euros per metric ton.
Source: Reuters (Reporting by Nina Chestney)