Gas prices in Europe are rising on the back of lower renewable energy forecasts

The Dutch and British wholesale gas price increased on Thursday morning, as temperatures and renewables are expected to drop at the weekend and the quieter trade before Easter.

LSEG data show that the benchmark Dutch front-month contract rose by 0.24 euros to 35.66 euro per megawatt hour. The June contract increased by 0.26 euros to 35.86 euro/MWh.

The British contract was 1.75 cents higher, at 86.75 cents per therm.

LSEG data shows that temperatures in north-west Europe will continue to fall by 1.5C tomorrow, but temperatures should average 12C at the weekend, 2-3C higher than normal.

Forecasts for the week ahead show an average rise of 0.6C.

The weekend is expected to see a decline in wind and solar energy generation, but it will rise next week. Gas demand is typically increased when renewable energy production falls.

Analysts from Engie EnergyScan stated that Europe could not afford to allow flexible LNG cargoes to leave for Asia. This means European gas prices would have to be higher than Asian prices.

They said, "The current price trend indicates this is the case."

EU officials announced on Wednesday that they have given up on pushing for an import ban of Russian LNG by the EU in future packages due to resistance from certain governments and the uncertainty surrounding alternative sources.

The Commission instead wants to create a road map that will end the EU's dependence on Russian energy in 2027. The plan will be announced early in May, but there are few details.

The benchmark contract on the European carbon markets was 0.25 euros lower, at 66.72 euro per metric ton. Nina Chestney reports.

(source: Reuters)