The price of gas in Europe is rising due to cooler weather and competition from Asia
Dutch and British wholesale prices for gas rose early on Friday, amid forecasts that demand would increase as temperatures cool and to stay competitive with Asian buyers of LNG.
According to LSEG, the benchmark Dutch front-month contracts was up 0.70 euros at 32.80 Euro per Megawatt Hour (MWh), which is $10.88/mmBtu by 0811 GMT.
The British day-ahead contract increased by 3.85 pence, to 79.50 cents per therm.
Analysts at Engie EnergyScan reported that the Dutch prices posted small gains Friday morning. They likely saw some support from Asian LNG prices.
The recent fall in European LNG prices has already seen LNG cargoes diverted to Asia.
Analysts at LSEG stated in a note that prices will likely trade at a higher level next week after the very warm weather this week has ended.
The cooler weather will increase the demand for local distribution zones (LDZs) in North-West Europe by 801 gigawatt hour (GWh) each day.
LSEG reported that the British system was facing tightness due to increased residential demand, and a decrease in Norwegian supply as a result of maintenance at Kollsnes Processing Plant.
The forecast is that the day-ahead price will fluctuate between 32-33 euro/MWh for TTF, and 80 pence/therm for Britain.
The market will also be following the negotiations next week between European Commission and Parliament, as well as Council, regarding proposals to lower gas filling targets.
Analysts at Energy Aspects wrote in a report that these proposals would result in an aggregate European storage capacity of 82-83 bcm, or 75%-76%, as opposed to an average of 95 bcm between 2016-20 and 105 bcm from 2022-24.
They added: "We warn that Europe will not fill up to these minimums as this would pose a significant risk for prices in Q1 26."
Gas Infrastructure Europe reports that EU gas storage capacity is now at 39.52 percent.
The benchmark contract on the European carbon markets rose by 1.53 euros, to 68.55 euro per metric tonne. Nora Buli, reporting from Oslo; Varun H K, editing)
(source: Reuters)
