Prompt Dutch and British wholesale gas prices fell on Tuesday morning on milder, windier weather, but a coming cold spell and continuing Red Sea attacks affecting shipping through the Suez Canal supported prices further out.

The benchmark front-month contract at the Dutch TTF hub was up 0.30 euros at 32.40 euros per megawatt hour (MWh) by 0939 GMT, LSEG data showed.

Forecasts of tighter fundamentals, with a drop in temperatures and renewables generation, will provide price support later in the week, Engie EnergyScan analysts said in a note.

A coming cold spell for the Jan. 8-10 period could be up to 4 degrees Celsius below normal, LSEG analyst Ulrich Weber said, adding that some forecasts had also turned colder from Jan. 15.

Current weather forecasts also suggest there will be lower renewable power generation during the cold period, Weber said.

Meanwhile, oil prices jumped in the first session of the New Year, boosted by the chances of Middle East supply disruptions after the latest attack on a container ship by Iran-backed Houthi militants in the Red Sea.

However, European gas storage levels remain “comfortable” at 86.51% full as of Dec. 31, providing some price resistance, Engie EnergyScan analysts said.

In Germany, Europe’s biggest gas consumer, the head of energy company E.ON said the supply situation has improved from last winter but instability in the Middle East could still send energy prices soaring.

The Dutch day-ahead contract was down 0.50 euros at 31.35 euros/MWh.

In the British gas market, the day-ahead contract TRGBNBPD1 fell by 4.50 pence to 73.75 pence per therm while the within-day contract TRGBNBPWKD was down 7.25 pence at 70.25 pence per therm.

In the European carbon market, the benchmark contract CFI2Zc1 was down by 2.76 euros at 77.61 euros per metric ton.
Source: Reuters (Reporting by Nora Buli in Oslo Editing by David Goodman)