Prices steady on warmer temperature forecasts, easing risk premium

Dutch and British wholesale gas prices were little changed on Tuesday morning, as expectations of warmer temperatures curbed demand and risk premiums over tensions in the Middle East eased.

The benchmark front-month contract TRNLTTFMc1 at the Dutch TTF hub edged up by 0.19 euro to 29.40 euros per megawatt hour (MWh) by 0822 GMT, while the June contract TRNLTTFMc2 slipped 0.15 euro at 29.10 euros/MWh, LSEG data showed.

In the British market, the front-month contract TRGBNBPMc1 edged down 0.29 pence to 73.30 pence per therm.

“The latest forecasts have adjusted again towards warmer weather for the last days of April and beginning of May,” LSEG analyst Saku Jussila said in a daily research note.

LSEG forecast local distribution zone demand for Northwest Europe, which is primarily used for heating, at 3,004 gigawatt hours/day (GWh/d) for the day-ahead, down 229 GWh/d.

Prices were bullish for most of last week due to concerns about tensions in the Middle East, but risk premiums associated with fears of an escalation of tensions have begun to ease after an Israeli strike on Iran was more muted than anticipated.

“Tensions across the Middle East continue to hold some level of concern, whilst strong gas storage levels for next winter give some comfort of the effect required to refill by the end of the Summer period,” analysts at consultancy Auxilione said in a daily research note.

Europe’s gas storage sites are currently 62% full, data from Gas Infrastructure Europe showed.

In the European carbon market, the benchmark contract CFI2Zc1 was up 0.39 euro at 66.72 euros per metric ton.
Source: Reuters (Reporting By Susanna Twidale; Editing by Varun H K)