EUROPE GAS - European prices drop after a short-lived price boost.
The Dutch and British gas contract on Friday lost gains made in the previous session due to concerns about the impact of sanctions on Russian energy supplies. However, the short-term demand and supply picture did not change.
LSEG data shows that the benchmark Dutch front-month contract was 32 euros per megawatt (MWh) or $10.89/mmBtu at 1018 GMT. This is a decrease of 0.40 euros.
The Dutch day-ahead contracts was down by 0.10 euros to 32.20 Euros/MWh.
The British gas front-month price dropped by 1.29 pence, to 80.43 pence/therm. However, the day-ahead contract rose 0.30 pence and was at 78.20 pence/therm.
After the U.S. imposed sanctions against Russia's oil giants and an agreement to ban Russian LNG imports by 2027, contracts have lost their gains.
A trader stated that the market had overreacted to these news, and that the upward movement was excessive. The overall outlook for the market was not changed.
He added that a lower wind at the end of the months could help and impact the storage levels.
Georg Mueller, LSEG's meteorologist, said that the weather will be cooler than usual, but also wet and windy, in the days to come. By mid-week, it should become milder and calmer.
Gas Infrastructure Europe's data shows that EU gas storage sites are now 82.8% filled, down from 95.3% last year.
Analysts at LSEG said that the increased demand for gas in the power sector led to early withdrawals of storage from October.
In a report, they stated that "as a consequence, aggregated storage in Northwest Europe (NWE), is now projected to be 79% full by November 1, a significant decrease from our previous expectation of 90% before winter."
They added that this could lead to storage stocks falling to 36% at the end of the winter in the base scenario and to a new record low of only 7% under a cold scenario.
The benchmark contract on the European carbon markets was up 0.04 euros at 78.48 euro per metric ton. Nora Buli, reporting from Oslo; Janane Venkatraman, editing.
(source: Reuters)
