Europe Gas: Prices dip on High inventories, warmer weather

Dutch and British gas prices fell on Monday morning on lower consumption due to warmer weather, while full inventories and strong flows of liquefied natural gas (LNG) also weighed on the market.

The Dutch December contract TRNLTTFMc1 was down by 1.60 euros at 45.05 euros per megawatt hour (MWh) by 1043 GMT, according to LSEG data.

The January contract TRNLTTFMc2 was down by 1.07 euros at 46.65 euros/MWh.

In Britain the day-ahead contract was down by 9.50 pence at 94.50 p/therm, while the December contract TRGBNBPMc1 fell by 2.99 p to 114.50 p/therm.

LSEG data show temperatures are expected to be warm over the next couple of days and through the weekend, reducing Local Distribution Zone (LDZ) demand, which is primarily made up of gas demand for heating.

“This morning we expect a soft day ahead, as consumption, both and non-(gas for power demand) could be declining by over 400 gigawatt hours/day in aggregation,” said LSEG analyst Ulrich Weber.

A European gas trader said that lower power prices are another factor sending prices down.

He added that the news about China reselling more LNG cargos is also bearish.

Europe’s gas storage sites remain nearly full, at 99.45% of capacity, according to the latest Gas Infrastructure Europe data. Strong LNG supply continues to pressure prices as well.

However, prices are expected to rise after this week and heading into December, as weather is forecast to be half a degree to one degree colder.

Lower wind generation will also support demand for gas.

In Britain, Peak wind power generation in Britain was forecast at 17.6 gigawatts (GW) on Monday, falling to 12.9 on Tuesday, out of a total metered capacity of around 23 GW, Elexon data showed.

In the European carbon market, the benchmark contract fell by 2.37 euro to 76.33 euros a tonne.
Source: Reuters (Reporting by Marwa Rashad; Editing by Susanna Twidale)