Prices fall on higher imports, stronger wind

British and Dutch wholesale gas prices fell on Friday morning as high wind speeds reduced demand for gas for power generation and imports into the region remained strong.

The benchmark front-month contract at the Dutch TTF hub fell by 0.25 euro to 56.40 euros per megawatt hour (MWh) by 0921 GMT, according to Refinitiv Eikon data.

The British within-day contract fell by 1.50 pence to 143.00 pence per therm, while the weekend contract TRGBNBPWE was down by 2.50 pence to 143.00 p/therm.

“Higher-than-expected wind generation, higher Norwegian supply and lower coal switching levels for power generation exerted downward pressure,” said analysts at Engie EnergyScan.

Norwegian gas nominations to continental Europe and Britain rose from 327 millions of cubic metres (mcm) per day on Thursday to 335 mcm per day on Friday.

UK peak wind generation is forecast at around 18 gigawatts (GW) on Friday, out of a total capacity of 22 GW, although it will fall to around 12 GW on Saturday, Elexon data showed.

The benchmark TTF front-month contract has risen almost 4% so far this week and is on track for its first weekly rise in almost two months.

“European natural gas prices posted weekly gains…however, overall both (UK and Dutch prices) remain substantially down from the start of year,” analysts at Fitch Solutions said.

“With Europe’s gas storage at 72% of full capacity, we except prices to remain bearish to neutral, barring short-term volatility due to inclement cold weather periods.”

Analysts at Energy Aspects said demand boosts from lower prices was weaker than they had expected.

“Northwest Europe will continue to display very weak demand over the coming months because of the high-price environment in 2022 and despite the extent to which prices have declined in recent weeks.”

Speculation that the U.S. Freeport liquefied natural gas (LNG) export terminal could restart soon was also bearish.

Freeport, the second biggest U.S. LNG exporter, sought approval from federal regulators to start loading LNG onto ships at its long-idled export plant in Texas, according to a filing made available on Thursday.

Eastbound gas flows fell on Friday morning on the Yamal-Europe pipeline to Poland from Germany, while Russian supplies to Europe via Ukraine rose, data from pipeline operators showed.

In the European carbon market, the benchmark contract rose by 1.30 euros at 94.31 euros a tonne.
Source: Reuters (Reporting by Bozorgmehr Sharafedin; editing by Nina Chestney)