EUROPE: Gas prices mixed due to high inventories and supply risks
LONDON, August 16 (Reuters) – Wholesale gas prices in the Netherlands and the UK were mixed on Friday morning as high inventories eased concerns about possible supply disruptions due to the war between Russia and Ukraine and tensions in the Middle East.
The benchmark front-month contract on the Dutch TTF hub rose 0.55 euros to 38.55 euros per megawatt hour (MWh), or $12.64/mmBtu, by 09:03 GMT, LSEG data showed.
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The October contract was 0.25 euros lower at 39.30 euros/MWh.
Both contracts remain at levels not seen since December last year.
In the UK market, the day-ahead contract rose 1.5 pence to 79.5 pence per therm.
“Full inventories … are on the bearish side (for the market), creating the possibility of a sharper price decline,” LSEG analyst Tomasz Marcin Kowalski said in a morning note.
Data from Gas Infrastructure Europe shows that European gas storage facilities were recently 88.47 percent full, close to their target of 90 percent, which was to be reached by November 1.
However, the market continues to closely monitor geopolitical tensions in the Middle East and Ukraine’s further advance into Russian territory, increasing the risk of disruptions to Russian pipeline supplies to Europe.
Gas deliveries are still ongoing, and Russian gas company Gazprom announced it would deliver 42.4 million cubic meters of gas to Europe via Ukraine on Friday.
More than a week after a surprise border crossing against Russia, Ukraine has scored a series of victories, but risks are mounting as Ukrainian troops make plans to defend their territory and Russia regains its footing.
“The ongoing escalations on the Ukrainian-Russian border will cause some concern, although they have been going on for some time. However, markets will continue to react to any news as there is an underlying nervousness,” said a note from consultancy Auxilione.
On the European carbon market, the reference contract rose by 0.05 euros to 72.16 euros per tonne.
(Reporting by Marwa Rashad; Editing by Emelia Sithole-Matarise)
