Prices edge lower as storage levels swell

Wholesale British and Dutch gas prices edged lower on Wednesday morning as high gas storage levels and weaker demand helped to offset the impact of a delay to the restart of Norway’s Hammerfest liquefied natural gas (LNG) terminal.

The benchmark Dutch front-month contract (TRNLTTFMc1) slipped by 0.78 euro to 24.73 euros per megawatt hour (MWh) by 0907 GMT according to Refinitiv Eikon data.

The Dutch day-ahead day contract (TRNLTTFD1) was 0.25 euro lower at 25.10 euros/MWh.

“High storage levels have continued to keep prices depressed, as there is less of a rush to refill inventories, even with a 90% storage inventory target for European Union nations by Nov. 1, 2023 looming,” said Rystad senior analyst Lu Ming Pang.

“Given the mild winter and already high storages, the EU looks set to reach those targets on schedule,” Pang said.

Europe’s gas stores are already 70.4% full, the latest data from Gas Infrastructure Europe showed.

Norway's Equinor 002NG has postponed the restart of production at its Arctic liquefied natural gas (LNG) plant in Hammerfest by one week to June 14 due to technical challenges, it said on Wednesday.

In Britain, the day-ahead contract (TRGBNBPD1) was 2.25 pence lower at 61.50 p/therm as warmer temperatures and expectations of higher wind power output curbed demand.

Gas demand from power plants was forecast at 24 million cubic metres/day (mcm) for Wednesday and 18 mcm/day on Thursday, Refinitiv Eikon data showed.

The forecasts were 6 mcm and 5 mcm respectively lower than previous expectations.

Peak wind power generation in Britain is forecast at 6 gigawatts (GW) for Wednesday, rising to 9.5 GW on Thursday, compared with total metered capacity of 22 GW, Elexon data showed.

In the European carbon market, the benchmark contract (CFI2Zc1) was down 1.45 euros at 80.22 euros a tonne.