EUROPE GAS-European Gas Prices Rise after US and Iran Exchange Strikes

Dutch and British wholesale gas contracts rose Monday morning, after Iran and the United States exchanged strike?and Israel sent?troops?deeper?into Lebanon to fight Tehran-backed Hezbollah.

Data from Intercontinental Exchange (ICE), showed that the benchmark Dutch front-month contracts at the TTF Hub were up 2.2 Euros at 48.23 euro per megawatt hour.

The British front-month contracts?were up 6.4 pence to 117.17 cents per therm.

Wayne Bryan, LSEG's principal of?gas research, said that the TTF DA Contract had to retrace its Friday losses.

Bryan stated that "for today, we expect the renewed deterioration of the geopolitical background to'support another price hike, as the prospects of a peace agreement?once more appear?distant."

Fundamentally, the temperatures in Northwest Europe will drop by three degrees Celsius. The temperatures are expected to return to seasonal norms in the next few days, before resuming their sharp rise after the weekend.

LSEG data shows that Norwegian flows will remain broadly flat in the near term, before improving on 5 June when several maintenance events are completed.

The market is still highly sensitive to any geopolitical headlines and updates on the US-Iran agreement. Fundamentals will not be the main driver in the near term. Although higher Norwegian imports, and stable LNG flows provide some compensation, the renewed escalation of violence in the Middle East is likely to keep a risk premium in prompt prices," Wayne stated.

Gas Infrastructure Europe's data shows that EU gas storage sites were last at 40.09% capacity, down from 47.89% one year ago.

The benchmark carbon contract in Europe was down 0.76 euros at 79.87 euro per metric ton. (Reporting and editing by Ronojoy Mazumdar; Marwa Rashad)

(source: Reuters)