Dutch and British gas prices climb on tighter winter outlook
LONDON, Sept. 9 (Reuters) - Dutch gas prices rose to their highest intraday level since January 2023 on Wednesday as the intensifying Middle East conflict, cooler weather and rising Asian gas prices led to aggressive buying ahead of winter.
The benchmark Dutch front-month contract at the TTF hub TFMBMc1 was up €3.02 at €78.73 per megawatt hour (MWh) or around $26.86 /mmBtu, by 0808 GMT, ICE data showed.
The British front-month contract NGLNMc1 was up 7.77 pence at 196.57 pence per therm, the highest level since late December 2022.
Storage levels, LNG flows and weather outlook support prices
Europe's gas stores are 67.12% full, compared with 79.48% a year ago, latest data from Gas Infrastructure Europe showed.
HSBC forecasts European inventories will reach 73% by Nov. 1, the lowest since data collection began in 2009, and does not expect Qatari LNG exports, excluding damaged capacity, to return to normal until at least early next year. Risks to those forecasts are skewed to the upside, said Sandan Ali, global oil and gas analyst at HSBC.
Iran's Revolutionary Guard said it fired ballistic missiles at a base in Jordan used by the U.S. military and attacked 10 ships on Wednesday, after the U.S. said it had destroyed five Iranian oil tankers, in a sharp escalation of the six-month-old conflict.
The recent attacks by both the U.S. and Iran have ended a period of relative calm and sent oil prices surging.
"The market is now pricing in the tightness. Low storage, sluggish injections, constrained Gulf exports, robust gas-fired power demand and renewed US-Iran escalation weakened confidence in a near-term normalisation of LNG flows," Ali said.
"TTF has also moved back to a premium to JKM (the Asian benchmark), indicating that Europe is bidding more aggressively for marginal LNG. Investment funds held a 219 TWh net long position, signalling increasingly bullish price sentiment," he added in a research note.
Northwest European gas demand is forecast to rise by 350 gigawatt-hours (GWh) per day on the day-ahead market due to cooler temperatures and weaker wind generation, providing additional support to prices, LSEG analyst Yuriy Onyshkiv said.
"It looks increasingly like 2021, when several factors contributed to the increase in gas prices over the year," said Anne-Sophie Corbeau, a research scholar at Columbia University's Center on Global Energy Policy.
In the European carbon market, the benchmark contract <CFI2Zc1> rose by €1.10 to €86.36 a metric ton.
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