EUROPE GAS - Prices edge up on weaker winds, correction after falling
Dutch and British wholesale prices for gas rose on Friday morning due to a weaker wind production. Meanwhile, the Slovak government-owned gas purchaser SPP denied a report that an agreement was nearing to replace Russian gas by Azerbaijan gas.
LSEG data show that the benchmark front-month contract at the Dutch TTF hub, which now rolls over to December, was 1,02 euros higher, at 39,67 euros per Megawatt Hour (MWh), by 1002 GMT.
The Q1 contract for 2025 was 0.81 euros higher, at 39.81 Euro/MWh.
Other contracts fell, but the British contract for this weekend was 0.75 cents higher at 98.50 cents per therm.
Slovak gas buyer has dismissed Bloomberg's report of Thursday, which claimed that European companies are close to a deal with Azerbaijan that would use the same pipeline that currently exports Russian Gas through Ukraine into the European Union.
After the report, gas prices are down.
In a press release, it stated that "We regularly discuss this topic with our partners. However, the information regarding the imminent conclusion of a contract for gas supply with SPP's participation is not true."
Wind speeds are expected to decrease in North-West Europe over the next couple of days, increasing demand for gas.
The NWE total demand will rise by 1852 gigawatt-hours per day (GWh/d), due to the lower temperatures and slower windspeeds of Monday. LSEG analyst Yuriy Onieshkiv said that a price increase is possible following yesterday's reports about the Ukraine transit agreement, unless this is confirmed.
Elexon data shows that peak wind generation in Britain will fall tomorrow to 4.3 gigawatts from 9.3 GW.
Energy Aspects, a consultancy, said that it believes TTF prices should be higher than what they are now trading in winter 2024-2025 to avoid depleting the storage.
The higher price would limit the use of gas in the power sector, and attract enough LNG from Asian markets. Analysts said that Europe's storage of gas is already expected to be reduced by around 15.6 billion cubic meters (bcm), or 48.0 billion cube metres, by the end of March 2025.
The delays in the North American LNG project further complicates the prospects of filling up storage quickly next. Production weakness in Turkey and Egypt increases their need for LNG imports. This suggests that Europe will have less LNG available.
Energy Aspects also stated that they expect Asia to consume 3.9 million more tonnes of LNG in the winter than last year, mainly due to growth in India and China. This should maintain an open arbitrage in the U.S. for spot cargoes heading to Asia.
The benchmark contract on the European carbon markets increased by 0.05 euros to 64.63 euro per metric ton.
(source: Reuters)
