EUROPE GAS - Price rises as Iran War hostilities flare up, LNG supply is tightened
Dutch and British wholesale natural gas contracts increased?on Wednesday morning? as new strikes in the Gulf clouded the outlook for a peace deal, the reopening of Strait of Hormuz as well as the possibility of a strike by Australian workers that could further reduce global LNG supply.
Intercontinental Exchange data showed that the benchmark Dutch front-month contract for the TTF hub had increased by EUR1.66 to EUR49.27 per Megawatt Hour (MWh) at 0744 GMT.
The British 'front-month contract' was up 4.19 pennies at 118.98 cents per therm.
Analysts at Engie EnergyScan stated that "both oil and gas prices have increased this morning due to the resumption of hostilities in Middle East and the lack of progress made by the United States with Iran."
Gulf hostilities flared up again on Wednesday as a?Iranian?missile attack damaged Kuwait's airport, and the U.S. Military carried out strikes near Strait of Hormuz. Diplomacy between Washington, D.C. and Tehran made little progress.
The conflict has caused a 20% reduction in global LNG supplies, with supplies from Qatar's key producer destined for customers in Asia being obstructed by the closed strait.
Arne Lohmann - Rasmussen is the chief analyst of Global Risk Management. He said that "the focus will remain on low EU storage before summer, when competition from Asia to import LNG for air conditioning and power generation will increase."
Daniel Hynes is a senior commodity strategist with ANZ. He said that Chinese LNG purchases had already recovered to levels similar to the previous year in May. The global supply shortages may worsen due to the strike of Australian workers at Inpex Corp’s Ichthys project. This project contributes about 2% of world output and exports approximately 9.3 million tonnes of LNG per year.
Gas Infrastructure Europe's data shows that EU gas storage facilities were last?40.76 percent full, down from 48.88% last year at this time.
The benchmark contract on the European carbon markets was EUR0.69 higher at EUR80.19 a metric ton. (Reporting and editing by Nina Chestney; Nora Buli)
(source: Reuters)
