Dutch and British gas prices mostly fell on Monday morning on softer demand and almost full gas inventories, however, market players remain concerned over geopolitical tensions in the Middle East.
The Dutch December contract, was down by 1.45 euros at 46.30 euros per megawatt hour (MWh) by 1004 GMT. The British contract for December fell by 5.60 pence to 117.50 pence/therm, LSEG data showed.
The Dutch day-ahead contract was the only rising contract, adding 0.17 euro to 40.92 euros/MWh, while the British day-ahead contract fell by 3.1 pence to 100.90 pence/therm, according to LSEG data.
“In a context where gas stocks are almost full and unable to handle any oversupply, ongoing weak demand and strong renewable generation are exerting strong downward pressure on European day-ahead prices,” analysts at Engie’s EnergyScan said in a morning note.
Europe’s gas storage sites remain nearly full, at 99.55% of capacity, according to the latest Gas Infrastructure Europe data.
LSEG analyst Wayne Bryan said that geopolitical risk continues to provide headwinds as the situation in Gaza worsens and increases the risk of contagion in the region.
“The market has been seemingly more reactive to bullish risk despite the extant bearish prompt backdrop,” he said.
Consultancy Auxilione said inventories will soon start to decline as withdrawals are likely to commence as temperatures start to drop after a warm start to winter.
LSEG’s Bryan said withdrawals for demand for heating are seen peaking at 163 million cubic meters per day (mcm/d) on Nov. 10 before falling back to 150 mcm/d at the start of next week.
In Britain, Bryan said that supply outlook is further bolstered by the six LNG cargoes that are scheduled to unload over the next 14 days.
Peak wind power generation in Britain was forecast at 10.2 gigawatts (GW) on Monday, rising to 11.3 GW on Tuesday, Elexon data showed.
In the European carbon market, the benchmark contract CFI2Zc1 fell by 1.57 euro to 76.07 euros a tonne.
Source: Reuters (Reporting by Marwa Rashad; Editing by Susanna Twidale)