EUROPE GAS - Prices fall on Iran and US peace deal but recovery pace is now key
Dutch and British natural gas contracts dropped?around 5 percent on Monday morning on the?news that the U.S. will end its war with Iran and reopen Strait of Hormuz. However, the timing of when Gulf production could recover is still unclear.
Intercontinental Exchange data showed that the benchmark Dutch front-month contract was EUR2.41 lower at EUR44.36 per Megawatt Hour at 0651 GMT.
The British front-month contracts was down 5.74 pennies? at 106.17 penny per therm.
The two contracts are at their lowest prices since early May.
U.S. officials and Iranian officials announced that they have reached an agreement on ending their war, and reopening the Strait of Hormuz. This major shipping route has been closed for about 20 percent of the global supply of liquefied gas in the Gulf.
Donald Trump, the U.S. president, said that The Strait would reopen on Friday. Ursula von der Leyen, EU Commission President, however, urged a reopening immediately.
Ship tracking data revealed that on Monday, a LNG tanker chartered India's Petronet crossed the east via Hormuz.
Analysts say that the key question is whether production can be restarted in the region quickly.
It is not known how long production will be up and running. Qatar's infrastructure and gas production facilities have suffered significant damage. Repairs could take some time, Thina Margrethe Salvedt, Nordea's chief analyst, said.
Global Risk Management's chief analyst, Arne Lohmann-Rasmussen, stated that the fundamental picture of gas is also quite positive, with low inventories and rising LNG demand across Asia.
LSEG analyst Ulrich 'Weber said that forecasts of hot...weather next week may also boost gas-for-power in Europe, due to lower wind outputs and possible curbs on French...nuclear power plants.
Gas Infrastructure Europe's data shows that EU gas storage facilities were last at?44.4% full, down from 53.02% last year.
The benchmark contract on the European carbon markets was EUR0.57 higher at EUR77.74 per metric ton. (Reporting and editing by Nora Buli)
(source: Reuters)
