EUROPE GAS-Prices edge up on geopolitical concerns

EUROPE GAS-Prices edge up on geopolitical concerns

LONDON, May 14 – Dutch and British wholesale gas prices were up slightly around noon on Tuesday as the market monitored the escalation in fighting between Russia and Ukraine near energy infrastructure, while warm weather softened demand, limiting the upside.

The benchmark front-month contract at the Dutch TTF hub was up 0.22 euro to 29.97 euros per megawatt hour (MWh) at 1122 GMT, while the July contract was up 0.28 euro to 30.15 euros/MWh, LSEG data showed.

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In the British market, the front-month price was up 0.96 pence to 72.50 pence per therm, while the day ahead contract was 1.90 pence higher at 70.50 p/therm.

Traders and analysts linked the small rally to news that Russia’s military had stationed small assault units near Ukraine’s northern Sumy region, which is close to the Shudzha area where Russian gas transits to Europe via Ukraine.

An industry source also tied it to news on higher frequency drone strikes by Ukraine in the Sudzhansky district of Russia.

“This is something that will likely accompany us over the coming months in terms of risks to Russian flows,” the source said.

Despite the geopolitical risks, the market is enjoying a comfortable supply/demand balance thanks to warmer weather and strong storage inventories, which is limiting further price gains.

European gas storage facilities were last seen 65.1% full, according to Gas Infrastructure Europe (GIE) data.

LSEG analyst Yuriy Onyshkiv said the market balance in northwest Europe remained comfortable; however, bearish momentum was losing steam.

“With supply from Norway and LNG expected to be fairly stable, any changes to the renewable power generation forecast could provide some volatility. Additionally, changes to the Norwegian maintenance schedule which is expected to scale up again next week could also end the short period of price stabilization we expect over the next few days,” Onyshkiv said.

The high storage is expected to ease competition for LNG over the coming months.

In the European carbon market, the benchmark contract was up 2.01 euros at 71.21 euros per metric ton.

(Reporting By Marwa Rashad; Editing by Janane Venkatraman and Mark Potter )