Dutch and British wholesale gas prices inched up on Wednesday morning as hotter weather increased cooling demand but amid expectations of stronger wind power later this week which could weaken demand for gas from power plants.

The benchmark front-month contract at the Dutch TTF hub TRNLTTFMc1 was up by 0.60 euro at 35.10 euros per megawatt hour (MWh) by 0912 GMT, while the August contract TRNLTTFMc2 was up 0.49 euro at 35.49 euros/MWh, LSEG data showed.

In the British market, the August contract TRGBNBPMQ4 rose by 2.45 pence to 84.45 pence per therm.

Temperatures in north-west Europe are expected to peak tomorrow, with the daily average up to 22.5 degrees Celsius, before decreasing to around a degree above the seasonal norm by Friday, LSEG data showed.

UK gas demand is expected to fall sharply due to the forecast of stronger wind speeds, with wind power generation expected to triple by Friday this week, while German wind power production is expected to rise gradually above the seasonal average by the end of this week, said LSEG gas analyst Tomasz Marcin Kowalski.

On the supply side, Norwegian exports to the continent are expected to increase from tomorrow due to high Norwegian field production and there will be a limit on export capacity through the Langeled pipeline to Britain until July 7. NSEA/AM

“TTF July 2024 prices closed yesterday slightly above their one-year average and almost at the coal switching average level,” said analysts at Engie EnergyScan, adding that they were still trading around this level this morning.

“This is a major test of whether the market thinks additional destruction of gas demand from power plants is needed to balance the European gas market,” they added.

In the European carbon market, the benchmark contract CFI2Zc1 edged up by 0.65 euro to 68.57 euros per metric ton.
Source: Reuters (Reporting by Nina Chestney)