Prices of gas in Europe soar due to cold weather and storage concerns
The Dutch and British wholesale contracts for gas rose by over 8% on Friday as the colder weather forecasts have caused traders to close short positions. The benchmark Dutch front month contract at the TTF Hub was up 2.69 euro at 36.50 Euros per Megawatt Hour (MWh), which is $12.43/mmBtu by 1401 GMT.
The contract gained nearly 30% in this week, the highest since last June 24.
The Dutch March price rose by?2.57 Euros to 35.30 Euros/MWh. The British price for February rose 8.00 pence per therm to 95.50 pence.
Arne Lohmann, Chief Analyst at Global Risk Management, said that the market was hit by a 'perfect storm' of cold weather forecasts and depleting stock, as well as geopolitical risks in 'Iran, and speculative activity.
He added that EU gas storage facilities are only 52.5% filled, which is just four percentage points more than in 2022 when the low filling level was one of the factors driving record high gas prices.
A trader stated that Friday's price increases were driven by the colder weather forecasts as well as high?storage withdrawals. Short covering from speculative participants had also provided a first impetus to the rise.
A decrease in wind power generation can also increase the demand for gas.
Analysts at ING warned that a rally could be expected to cover the short positions of funds in TTF, due to the large short position they held through the first part of the winter.
They added that "Investment funds' net short of TTF has already been reduced from 92.76 Terawatt Hours (TWh), in mid-December, to 55.14TWh at present." The benchmark contract on the European carbon markets was higher by 1.08 euros at 93.32 euro per metric tonne. Reporting by Nina Chestney and Nora Buli, both in London; editing by Susanna Twdale
(source: Reuters)
