EUROPE GAS-Dutch prices rangebound amid gas storage target extension
The Dutch wholesale gas price ranged on Wednesday morning, as warmer temperatures were expected to continue through this week before turning colder the following week. In addition, the European Commission had proposed an extension of two years for gas storage targets.
According to LSEG, the benchmark front-month contract for the Dutch TTF Hub dropped by 0.04 euros to 43.26 Euro per megawatt hour at 1012 GMT.
The Dutch May contract increased by 0.54 euros to 43.30 Euro/MWh.
The average temperature in North-West Europe is expected to increase until the end the week. This will reduce demand. However, temperatures below normal are expected to return to the region early next week.
Oleh Scrynyk, LSEG analyst and gas market participant, says that the colder weather forecast early next week brings bullish risks and uncertainty to markets.
The European Commission has proposed a 2-year extension to the EU's goals for filling gas storage despite concerns from some countries that these targets are driving up gas prices.
In the proposal, the EU executive favored keeping until 2027 the target of filling EU gas storage caverns up to 90% capacity by November 1 of each year. It also proposed a series intermediate targets for the months preceding November.
Analysts at BofA said that "Europe's 90 percent storage mandate by November 1 means the storage at the beginning of the next heating seasons will need to high, even if inventories are running low this winter."
In this case, summer-front prices are higher, but winter-front prices are not, leading to an inverted seasonal spread. Winter-summer spreads tend to be positive in the absence of abnormal supply disruptions and minimum storage requirements. This encourages storage providers, who purchase gas during summer, to store it until winter.
A schedule published on Wednesday showed that the Commission had also postponed announcing an accelerated end to Russian energy imports a second and final time, from March 26 until an unspecified future date.
Prices rose on the British market. The April contract had a 0.97-penny increase at 104.64 cents per therm.
The benchmark contract on the European carbon markets increased by 0.28 euros to 68.78 euro per metric tonne. Nina Chestney reports.
(source: Reuters)
