Gas prices in Europe are lower due to milder temperatures

The prices of Dutch and British gas wholesale fell on Friday as the forecast for milder weather curbed demand.

According to LSEG, the benchmark front-month contract for the Dutch TTF hub had fallen 0.30 euros at 46 euros per Megawatt Hour (MWh), which is $13.88 /mmbtu by 0925 GMT.

The Dutch March contract is down by 0.37 euros, at 46.10 Euros/MWh.

The front-month contract in Britain fell by 0.71 penny to 116.1 pence per therm.

The weather is the most important factor in determining whether or not a market will be bearish. In a daily note, LSEG's Wayne Bryan, head of European Gas Research at LSEG, said that the latest forecast shows temperatures being revised higher between January 20 and February 12.

Analysts said that the need to replenish Europe's gas supplies after winter would likely support prices.

Analysts at Energy Aspects stated that "Europe's year-on-year (y/y) deficit in stock has increased to approximately 16 billion cubic meters (bcm), whereas it will be just over 4 bcm end-October 2024."

They added that "we expect this deficit will expand to 25 bcm before end-March making it difficult to achieve the summer stockbuild without Europe maintaining high pricing to continue to attract spot LNG and divertible LNG supplies."

Gas Infrastructure Europe reported that Europe's gas storage tanks were 63.3% filled.

The benchmark EUA contract on the European carbon markets was trading at 79.69 euro per metric ton. It had previously traded at 79.75 euro, which was a 12-month-high.

Carbon prices have increased over the last few weeks due to colder weather increasing demand for fossil fuel power. High gas prices also led to an increase in coal power production, which emits double as much CO2 as gas plants.

Analyst at Energi Danmark: "As coal is increasingly attractive as an energy source, the demand for permits also increases. Speculative investors have taken on new positions in long-term investments."

(source: Reuters)