Tuesday, May 17

Prices mixed on lower wind output, bullish coal


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LONDON — British wholesale gas prices rose on Wednesday morning amid lower wind output, while Dutch prices traded sideways.

In the British gas market, the day-ahead contract rose by 17.00 pence to 202.00 pence per therm by 0746 GMT, while the contract for working days next week was 30.25 pence higher at 229.25 p/therm.

In Britain, wind output is weak which should continue to support gas-for-power demand. Peak wind generation is forecast at 5.3 gigawatts (GW) on Wednesday, falling to 2.5 GW on Thursday, out of total metered capacity of around 20 GW, Elexon data showed.

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Although nominations for liquefied natural gas (LNG) send-out are higher in Britain as an outage at the South Hook terminal ended, physical send-out is at zero compared to 31 million cubic meters (mcm) yesterday.

In the Dutch market, day-ahead gas at the TTF hub was down 1.65 euros at 103.00 euros per megawatt hour (MWh), while the May contract was 1.28 euros higher at 104.28 euros/MWh.

Nominations for Russian gas deliveries to Slovakia via Ukraine via the Velke Kapusany border point dipped slightly on Wednesday, but eastbound flows through the Yamal-Europe pipeline into Poland from Germany via the Mallnow metering point and Nord Stream 1 flows were largely stable.

“Italian nominations suggest lower consumption and slightly higher LNG send-out which could explain less need for Russian gas,” said Refinitiv gas analyst Marina Tsygankova.

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On Tuesday, Gemany’s network regulator said the country’s gas reserves would last until at least late summer should Russian supplies stop now, adding that pressure on the European Union to ban Russian energy was building over civilian deaths in Ukraine.

European coal prices could also be lending support, traders said. European API2 coal futures for 2023 have risen by 27% to $234 a tonne since April 4.

Last week, the European Union adopted a ban on Russian coal imports from Russia which will be fully effective from the second week of August.

On the bearish side, Britain and north-west Europe are expected to experience milder weather than previously forecast for the rest of this week.

In Britain, average temperatures are seen around roughly 3 degrees Celsius above normal until early next week, Refinitiv Eikon data showed.

In the European carbon market, the benchmark contract was 1.24 euros lower at 77.77 euros a tonne. (Reporting by Nina Chestney)



financialpost.com