EUROPE GAS-Prices down on strong Norwegian supply, warmer weather

EUROPE GAS-Prices down on strong Norwegian supply, warmer weather

LONDON, Aug 5 (Reuters) – Dutch and British wholesale gas prices were down on Monday morning, but not as much as equity markets, on stronger Norwegian supply and as temperature remain above seasonal norms for the first half of August.

The market decline was much smaller than the massive selloff that rocked equity markets around the world on Monday, which sent European shares to near six-month lows amid a global sell-off in equities on fears of a slowdown in U.S. economic growth.

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The benchmark front-month contract at the Dutch TTF hub was down 2.04 euros at 35.06 euros per megawatt hour (MWh), or $11.24/mmBtu, by 0910 GMT, its lowest level since June 14, LSEG data showed.

The Dutch October contract was down 1.59 euros at 36.15 euros/MWh.

In the British market, the day-ahead contract was up 5.40 pence at 78.00 pence per therm.

“Stronger Norwegian flows seen this morning compared to recent weeks (and) temperatures are expected to hold above seasonal normal for the foreseeable, with some warmer days this week before settling the rest of August,” consultancy Auxilione said in a morning note.

The short-term forecast over the two-week horizons indicates lower demand amid robust Norwegian flows and an expected recovery in liquefied natural gas (LNG) send-out – barring any further extension at Montoir – which remains fully shutdown until 12 August, LSEG analyst Yuriy Onyshkiv said.

“The unknown is the continued tension in the Middle East and the further impact on gas prices in Europe. One thing seems clear – this turbulence is likely not to go away any time soon,” he added.

The killing of a Hamas leader in Iran has raised concerns that the 10-month war in Gaza between Israel and Hamas was turning into a wider Middle East war.

A spreading conflict between Israel and Hezbollah could lead to a halt of the Israel’s gas production fields, forcing Egypt and Jordan, which are importers of Israeli gas via pipeline, to rely more on the global LNG market.

The prospect of Iran getting more actively involved in a conflict poses a risk of a closure of the Strait of Hormuz, what would affect global LNG-markets significantly, however analysts said this remains an unlikely scenario for now.

In the European carbon market, the benchmark contract inched down by 2.33 euro to 68.25 euros a metric ton.

(Reporting by Marwa Rashad; Editing by Nina Chestney)