EUROPE GAS-Prices rise on Middle East conflict, lower wind speeds

EUROPE GAS-Prices rise on Middle East conflict, lower wind speeds

LONDON, July 29 (Reuters) – Dutch and British wholesale gas prices rose on Monday morning as geopolitical tensions in the Middle East rose following a rocket strike in the Israeli-occupied Golan Heights at the weekend and as lower wind speeds increased demand for gas from power plants.

The benchmark front-month contract at the Dutch TTF hub was up 1.07 euro at 33.45 euros per megawatt hour (MWh), or $10.63/mmbtu, by 0809 GMT, LSEG data showed.

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The Dutch September contract was up 0.32 euros at 33.60 euros/MWh.

In the British market, the day-ahead contract was up 2.1 pence at 77.50 pence per therm.

“The market is fairly supported this morning amid fears of escalation between Israel and Hezbollah/Iran after a deadly rocket attack from Lebanon into Israeli-occupied territory,” analysts at Engie EnergyScan said in a daily market note.

Israel has vowed retaliation against Hezbollah in Lebanon following a rocket strike in the Golan Heights that killed 12 teenagers and children.

Iran-backed Hezbollah denied responsibility for the attack.

Prices were also supported by expectations of lower wind power output.

LSEG analysts said lower wind speeds are expected to lead to higher demand for gas from power plants in northwest Europe, with non-local distribution zone demand, which is mainly power demand, up 41 gigawatt hours/day (GWh/d) at 1,912 GWh/day for Tuesday.

In Britain peak wind power generation was forecast at 8.6 gigawatts (GW) on Monday dipping to 7.2 GW on Tuesday, Elexon data showed.

Liquefied natural gas (LNG) supply in Europe is also curbed by an extension to maintenance at France’s Monitor LNG terminal which is now expected to restart in mid-August.

In the European carbon market, the benchmark contract rose by 0.73 euro to 68.60 euros a metric ton.

(Reporting By Susanna Twidale; Editing by Mrigank Dhaniwala)