EUROPE GAS-European Gas Prices soar by more than 40% due to LNG Supply Fears
The benchmark Dutch and British gas price rose by more than 40% in the morning of Tuesday, as fears about supply grew after Iran and Israel intensified their attacks on the Middle East, and Qatar stopped 'production' at its Ras Laffan plant, which is the largest export facility in the world.
Europe has been increasing its LNG imports over the last few years to replace Russian gas after Russia invaded Ukraine. It will need to import even more to replenish its rapidly depleting LNG storage.
Due to the conflict in the Middle East, the Strait of Hormuz has been effectively closed, which means that nearly 20% of all LNG is no longer transiting through the Strait. This has caused a rise in prices internationally.
ICE data revealed that the Dutch front-month contract, a benchmark for Europe at the TTF Hub, had risen 18.384 Euros to 62.755 Euros per megawatt hour or around $21.33/mmBtu by 1028 GMT. It had previously reached 63.490 EUR/MWh, the highest level seen since January 2023.
ICE data showed that the British April contract had increased by 44.36 penny to 158.15 cents per therm.
The disruptions occur at a crucial time for the market. Especially in Europe, stocks are low as the heating season is nearing an end for Asia and Europe. "This will make restocking for consumers more difficult in the coming months," Daniel Hynes said, senior commodity analyst at ANZ Research.
Alternatives are scarce. He added that the US could increase LNG exports, but this "is unlikely to offset Qatar's supply in the near-term".
BMI, an affiliate of Fitch, expects Dutch TTF to remain above 40 euros/MWh, followed by a rapid retracement in Q2, as the geopolitical risk premiums diminish.
S&P Global Energy assessed the April DES North West Europe (NWE), marker at $15.47/MMBtu, on March 2. This was a 56.61% increase?day-on?day.
The Japan Korea Market, widely used as a benchmark for Asian LNG, has risen to $25 per million British thermal units (mmBtu) from $10.8 on the Friday.
Aly Blakeway is the head of Atlantic LNG for S&P Global Energy. She said that Asian demand centres will continue to outbid European buyers 'for spot cargoes originating from the Atlantic Basin, especially from the US and West Africa, in order to meet their domestic consumption needs.
The benchmark contract on the European carbon markets was up 2.02 euros at 72.59 euro per metric ton. (Reporting by Marwa Rashed; Editing by Susanna Twdale)
(source: Reuters)
