Prices lower in Europe due to softer demand and higher renewables
Dutch and British wholesale prices of gas fell on Thursday, amid forecasts for higher wind and solar production and a softer demand. However, prices may be affected by changes in energy policy as Donald Trump assumes the U.S. presidency next week.
According to LSEG, the benchmark front-month contract for the Dutch TTF Hub dropped by 0.80 euros to 46.20 Euro per Megawatt Hour (MWh) or $13.94 per mmBtu by 0933 GMT.
The Dutch day-ahead contracts was lower by 0.88 euros at 46.40 Euro/MWh.
The day-ahead contract in Britain was 1.50 pence more expensive at 118.00 cents per therm.
According to LSEG analyst Wayne Bryan, the gas-for-power forecast is expected to weaken on Monday due to improved wind and solar forecasts. Wind speeds are forecast to increase from Friday to Jan 24, and solar output will be revised higher up until Jan 22.
Bryan stated that geopolitical concerns will continue to cause volatility in the TTF.
Temperature forecasts for North-West Europe are expected be lower at the weekend than the previous forecasts. LSEG data indicated that temperatures are likely to drop below normal from January 17-22.
Auxilione, a consultancy, said that in the United States the front-month gas price at the Henry Hub has been steadily increasing for several months. It is now close to $4.00. The last time this happened was in 2021, at the beginning of the energy crisis.
On Monday, Donald Trump will be inaugurated as President. The European Union relies heavily upon U.S. exports of LNG to replace Russian pipeline gas.
Analysts at Auxilione said that Trump's decisions in the next few weeks, both regarding direct energy policies such as LNG export plans and also in terms of his political influence over other countries like ending the conflict in Ukraine, could cause volatility on the energy markets.
Sources said that Trump intends to make it easier for certain U.S. LNG producers to renew their export permits.
Sources said that Trump would likely include this change in his executive order on LNG, which he would issue on the first day of his presidency. Trump, who will take office on Monday has stated that he will issue an executive order on LNG on his first day in office. This would allow him to end the pause in approvals of new LNG projects put in place by outgoing president Joe Biden in January last.
It could also help to increase the number of U.S. LNG imports.
The benchmark contract on the European carbon markets was down by 0.10 euros at 77.92 euro per metric ton.
(source: Reuters)
