Europe Gas: Prices rise as low wind boosts gas-for-power demand

Dutch and British wholesale gas prices rose on Monday morning as low wind speeds raised gas demand for power generation, while strong inventories and above-normal temperatures could limit further rises.

The benchmark front-month contract at the Dutch TTF hub was 0.98 euro higher at 39.88 euros per megawatt hour (MWh) by 0926 GMT, LSEG data showed.

The day-ahead contract contract was 1.28 euro higher at 39.53 euros/MWh.

The British contract for the weekend TRGBNBPWE was 4.00 pence higher at 99.25 pence per therm, while the day-ahead contract TRGBNBPD1 rose by 2.75 pence at 99.75 p/therm, LSEG data showed.

“Gas-for-power demand is forecast to increase with low wind speeds the main driver,” said LSEG analyst Wayne Bryan.

“Our outlook is for prices to remain in the 38-40 euros/MWh range over the coming days. After three consecutive days of losses, prices could pare back some of (that) today,” Wayne added.

Wind speeds are forecast to hold below 10 gigawatts (GW) in north-west Europe until at least Nov. 12 and not be above normal levels until Nov 18. Solar output is forecast to fall over the coming days and remain around normal until at least Nov 18, LSEG data showed.

Demand is expected to rise by 251 gigawatts hour per day (GWh/d) on the day-ahead, according to LSEG data.

Meanwhile, above-normal temperatures in most European countries continue to limit gas demand for heating, analysts at Engie’s EnergyScan said.

In the European carbon market CFI2Zc1, the benchmark contract inched up by 0.75 euro to 64.62 euros per metric ton.
Source: Reuters (Reporting by Marwa Rashad; Editing by Nina Chestney)