EUROPE GAS-European gas prices increase as cold weather increases demand
Dutch and British gas prices rose on Monday as the cold weather drives up demand for gas heating and also triggers more withdrawals from gas storage facilities.
LSEG data shows that the benchmark Dutch front-month contract was up 0.64 Euro at 31.64 euros/MWh, or $10.76/mmBtu at 0849 GMT.
This is the highest intraday value in 10 days.
The British day-ahead price of gas was 1.25 pence more expensive at 82 pence a therm. Meanwhile, the front-month contract rose by 0.26 pence and now stands at 82.90 pence p/therm.
"Our outlook is bullish today mainly because of the spike in demand for residential property driven by the recent cold spell," said LSEG Analyst YuriyOnyshkiv.
He added that the local distribution zone demand in Britain, which is largely driven by gas consumption for heating will almost double as temperatures fall from 10.5C last week to 3,34C this coming week.
Onyshkiv stated that with no additional gas flows from Norway expected and the liquefied gas supply already being quite robust, there should be a tightening of the overall system and gas storages will begin to deplete over the next two-weeks.
Gas Infrastructure Europe's data shows that EU gas storage facilities were 82.02% full last month, compared to 91.27% last year.
Arne Lohmann-Rasmussen is the chief analyst of Global Risk Management. He said that the recent increase in U.S. gasoline prices at Henry Hub (which have increased nearly 40% in the last month) also poses a risk to prices going up.
The U.S. exports a large amount of LNG to Europe and thus links the two markets.
Rasmussen stated that Henry Hub would soon be setting the lowest price for TTF, reflecting a level at which it won't be economically feasible to produce and transport LNG to the EU any longer.
Ukraine said that it had secured U.S. LNG imports via Greece to meet its winter requirements from December to March of next year.
The benchmark carbon contract in Europe was down by 0.24 euros at 80.69 euro per metric ton. (Reporting and editing by Alison Williams; Nora Buli)
(source: Reuters)
