EUROPE GAS prices near a one-year high due to concerns about Russian supply and cold weather

The Dutch and British wholesale gas prices reached their highest intraday levels in almost a year on Thursday, amid concerns about Russian gas supply. Austrian energy group OMV said that an award of over $243 mln for irregular German gas supplies by Gazprom may impact its Gazprom gas supply agreement.

The benchmark front-month contract for the Dutch TTF hub increased by 1.71 Euros at 45.38 euro per megawatt hour at 0903 GMT. This was its highest intraday value since November 27 last year.

The Dutch day-ahead contracts added 1.72 Euros at 45.45 euro/MWh. This is its highest intraday value since November 24.

The British contract for the month of December increased by 4.90 pence, to 115.00 pence per thermo, the highest intraday value since November 27. LSEG data revealed.

OMV announced that the award will be offset with immediate effect from payments OMV is due to make to Gazprom export under its Austrian Gas Supply Contract.

OMV estimates that the gas volume potentially affected by the award for the Austrian Virtual Trading Point is up to 7,400 Megawatt per hour. This corresponds to about 5 TWh each month.

Klaas Dizeman, a market analyst with Brainchild Commodity Intelligence, said that what OMV says could indicate that Gazprom's gas supply might cease. The next payment date of 20 November would be a logical conclusion to this. This could mean that the gas supply via Ukraine will be halved from Nov 21 if Gazprom stops delivery.

OMV has said that it anticipates a worsening in its contract with Gazprom export, a subsidiary company of the Russian gas giant. This could lead to a stoppage of gas supplies.

SPP, Slovakia's largest gas buyer, said Wednesday that it supports gas transit through Ukraine. However, due to the possibility of this stopping it is taking steps to ensure supply.

It has also agreed to a pilot short-term contract with SOCAR in Azerbaijan for gas.

Weather forecasts that show temperatures of low single-digits through December have also supported prices.

In a morning report, Auxilione stated that "colder temperatures will still be expected next week. This will cause nerves to rise in the market."

The gas system in Britain is 10,8 million cubic metres (mcm), short, on Thursday. Temperatures are expected to fall by 1.7 Celsius the next day.

The benchmark contract on the European carbon markets rose 0.94 euros to 67.25 euro per metric ton.

(source: Reuters)