Dutch and British wholesale prices hit their highest intraday level in nearly one year on Thursday amid concerns over Russian gas supply after Austrian energy group OMV, said an award of more than $243 mln in connection with irregular German gas supplies from Gazprom could impact its Gazprom supply deal.
The benchmark front-month contract at the Dutch TTF hub TRNLTTFMc1 rose by 1.71 euros at 45.38 euros per megawatt hour (MWh) by 0903 GMT, its highest intraday level since Nov. 27 last year, LSEG data showed.
The Dutch day-ahead contract TRNLTTFD1 added 1.72 euros at 45.45 euros/MWh, its highest intraday level since Nov. 24.
The British contract for December rose by 4.90 pence to 115.00 pence per therm, the highest intraday level since Nov. 27. LSEG data showed.
OMV said the award would be set off with immediate effect against payments to be made by OMV to Gazprom Export under its Austrian gas supply contract.
The potentially affected volume of gas for the Austrian Virtual Trading Point, due to the award, is estimated at up to 7,400 megawatt per hour, OMV said, which corresponds to approximately 5 TWh per month.
“What OMV states could mean that gas supplies from Gazprom might stop,” said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence. “The next payment due date on 20 Nov would mean a logical end to this and this might mean that gas supplies via Ukraine will halve from Nov 21 onwards if Gazprom quits delivery.”
OMV said it expects a worsening of its contract with Gazprom Export, a subsidiary of the Russian gas giant, possibly resulting in a halt of gas supply.
Slovakia’s main gas buyer SPP said on Wednesday it supports the continuation of gas transit through Ukraine but due to the risk of that stopping, it is taking measures to ensure supply.
Among other measures, it has agreed a short-term pilot contract for gas from Azerbaijan’s SOCAR.
Meanwhile, weather forecasts showing temperatures in the low single digits until the end of December has also lent support to prices.
“Colder temperatures are still expected next week which will hold nerves in the market,” consultancy Auxilione said in a morning note.
In Britain, the gas system is 10.8 million cubic meters (mcm) short on Thursday, and temperature is expected to drop by decrease 1.7 Celsius on the day ahead.
In the European carbon market, CFI2Zc1, the benchmark contract rose by 0.94 euro to 67.25 euros a metric ton.
Source: Reuters (Reporting by Marwa Rashad; additional reporting by Nora Buli in Oslo; Editing by Jane Merriman)