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Prices mostly higher on cooler temperatures, lower wind

British and Dutch wholesale gas prices mostly rose on Monday morning as forecasts for cooler temperatures and lower wind output increased demand.

The front-month contract at the Dutch TTF hub TRNLTTFMc1, the benchmark for European gas trading, was 3.00 euros higher at 51.30 euros per megawatt hour (MWh) by 0917 GMT, Refinitiv Eikon data showed.

The contract had dipped to a fresh 17-month low on Friday.

The UK March contract TRGBNBPMH3 was up 3.50 pence at 127.00 pence per therm, while the day-ahead TRGBNBPD1 rose by 4.75 pence to 125.00 pence/therm.

The latest weather forecasts for the end of this month and beginning of March show cooler temperatures than the previous forecast, Refinitiv Eikon data shows, which could increase demand for heating.

Wind speeds are also forecast to fall in Britain and Germany this week, which should increase demand for gas for power generation.

“Prices are rebounding this morning. But they should face strong resistance from the five-day average (58.31 euros/MWh on Cal 2024), particularly as Norwegian supply is nominated higher for today,” said analysts at Engie EnergyScan.

“Although German wind generation should remain high today, averaging 36,511 MW, it is expected to drop to 20,129 MW tomorrow and to 6,737 MW on Wednesday,” they added.

On Sunday, the International Energy Agency (IEA) warned of possible energy shortages next winter as relatively little new liquefied natural gas (LNG) is coming to the market while China’s consumption is set to rise this year.

An additional 23 billion cubic metres (bcm) of LNG is expected this year, and with only a small increase in economic output as pandemic restrictions ease, China would likely swallow 80% of the extra gas, the IEA said.

In the European carbon market, the benchmark contract CFI2Zc1 was up 1.11 euros at 97.36 euros a tonne.
Source: Reuters (Reporting by Nina Chestney)

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