Dutch and British wholesale gas prices rose on Wednesday morning as market players braced for the potential escalation of Israel-Iran conflict and amid concerns over supply disruptions after Qatar asked LNG vessels to wait outside the Strait of Hormuz until they are ready to load.
The benchmark Dutch front-month contract at the TTF hub (TRNLTTFMc1) rose by 0.10 euro to 39.70 euros per megawatt hour (MWh), or $13.40/mmBtu, by 0905 GMT, according to LSEG data.
The August contract was up 1.15 euro at 40.05 euros/MWh.
The British day-ahead contract (TRGBNBPD1) was 1.30 pence higher at 95.55 pence per therm.
Qatar has said gas production at the world’s largest gas field, South Pars, is steady after it was hit by an Israeli air strike on Saturday.
However, on Tuesday QatarEnergy instructed tankers to remain outside the Strait of Hormuz and to enter the Gulf only the day before loading, sources told Reuters.
“QatarEnergy’s directive for tankers to delay entry into the Gulf has heightened market sensitivity to further supply risks,” said LSEG analyst Dzmitry Dauhalevich.
“While fundamentals remain broadly stable, the market continues to price in geopolitical risks, supporting a sideways to bullish outlook,” he said.
The Asian benchmark Japan Korea Marker (JKM) rose to $14.00/mmBtu on Wednesday.
“While shipments are not expected to be delayed, it’s enough to keep the market nervous. The waterway handles around 20% of global trade. European gas futures gained as traders became increasingly nervous about supplies due to its heavy reliance on seaborne flows,” said Daniel Hynes, senior commodity strategist at ANZ Research.
From a fundamental perspective, heating demand across north-west Europe is forecast slightly down to sideways on the day ahead at 570 gigawatt hour per day (GWh/d), with average temperatures holding steady at 20 degrees Celsius, Dauhalevich said.
Total Norwegian exports are nominated 9 million cubic metres (mcm) higher at 279 mcm/day, with flows to Continental Europe staying stable at 248 mcm/day.
The European Commission has officially proposed legal measures on Tuesday to enact a ban on Russian gas imports, with the aim of halting the EU’s reliance on Russian energy by the end of 2027.
In the European carbon market, the benchmark contract (CFI2Zc1) inched up by 0.05 euro to 74.69 euros per metric ton.
Source: Reuters