EUROPE GAS-Prices dip on soft demand, high inventories

Dutch and British gas prices fell on Friday morning as soft demand and almost full gas inventories weighed on the market.

The Dutch December contract TRNLTTFMc1 was down by 1.63 euros at 46.50 euros per megawatt hour (MWh) by 0931 GMT, according to LSEG data.

The January contract TRNLTTFMc2 was down by 1.30 euros at 48.50 euros/MWh.

In Britain the day-ahead contract was down by 3.50 pence at 101.50 p/therm.

“Today, the demand side looks slightly bearish as we look at a day-ahead and an upcoming week with especially LDZ (local distribution zone) demand being soft,” LSEG analyst Ulrich Weber said in a daily research note.

LDZ demand is primarily made up of gas demand for heating and expectations that temperatures will be at seasonal norms or higher than average for the time of year in some parts of Europe next week dented gas demand.

LSEG analysts said temperatures could be 2-5 degrees Celsius higher than normal across France and western Germany early next week.

Meanwhile gas supply remains strong. Europe’s gas storage sites remain nearly full, at 99.57% of capacity, according to the latest Gas Infrastructure Europe data.

Gas supplies from Russia to Europe were also stable. Russia’s Gazprom said it will ship 42.4 million cubic metres of gas to Europe via Ukraine on Friday, a volume in line with recent days.

Analysts however warned the risk of a cold snap or supply disruptions due to the conflict in the Middle East were likely to cap price falls.

“The (Dutch) TTF near curve will still likely carry a substantial amount of risk premium related to the typical weather risks and concerns over tension escalation in the Middle East,” analysts at Energy Aspects said.

In the European carbon market, the benchmark contract CFI2Zc1 fell by 0.90 euro to 76.48 euros a tonne.
Source: Reuters (Reporting By Susanna Twidale; Editing by Emelia Sithole-Matarise)