Europe Gas: Prices down on mild weather, solid inventories

Dutch and British wholesale prompt gas prices were down on Wednesday morning, amid healthy inventories, mild weather and strong flows of liquefied natural gas (LNG).

The benchmark front-month contract TRNLTTFMc1 at the Dutch TTF hub eased by 1.00 euros to 28.15 euros per megawatt hour (MWh) by 0934 GMT, while the day-ahead contract TRNLTTFD1 was down 0.70 euros at 28.00 euros/MWh, LSEG data showed.

In Britain, the day-ahead contract TRGBNBPD1 fell by 2.23 pence to 72.00 pence per therm.

“It is a slightly bearish market, due to warmer weather and more LNG,” a European gas trader said, adding that market players are cautious about the developments in the Middle East as attacks in the Red Sea continue.

Consultancy Auxilione said that there was no real change to market fundamentals with seasonal normal temperatures expected for the weeks ahead, plenty of gas in storage and LNG vessels still arriving for the weeks ahead despite increased interest for cargoes from the Far East market in recent days.

LSEG data showed temperatures in Europe are forecast to stay mild for another three days, then will drop by almost 5 degrees Celsius into next week for a couple of days and then return to above normal thereafter.

Analysts at Engie’s EnergyScan said that a rise in JKM prices, the Asian gas benchmark, could concern some European buyers, as it increased by 0.36% on the spot to €31.345/MWh and by 0.20% on the May 2024 contract to €31.091/MWh, both levels above European gas prices.

“At the moment, Asia LNG imports are on a seasonal decline, but they should rebound from May. With the current price differential, there is therefore the risk of a diversion of LNG cargoes from Europe to Asia,” EnergyScan analysts said.

“(However) we believe that on the one hand Europe has sufficiently comfortable gas stocks to afford a certain drop in LNG supply and on the other hand we are not sure that China will continue to buy LNG if prices soar,” they added.

Europe’s gas stores are currently 59.5% full, the latest data from Gas Infrastructure Europe showed.

In the European carbon market, the benchmark contract CFI2Zc1 eased by 0.46 euros to 60.38 euros a metric ton.
Source: Reuters (Reporting by Marwa Rashad; editing by Nina Chestney)