Gas prices creep upwards as hot weather is set to lift demand
There was now focus on cooling demand in Europe, with some regions seeing hot weather, while heatwaves should also lift demand in Asia and the US, impacting LNG prices.
European wholesale gas prices crept upwards on Tuesday morning as warmer weather is set to lift power demand for cooling and competition increases for liquefied natural gas (LNG) supplies.
The benchmark front-month contract for European gas was up by €0.33 at €34.63 per megawatt hour (MWh).
The day-ahead contract for European gas priced by the Dutch TTF hub, was up €0.48 at €34.63 MWh.
"The main drivers haven't really changed, there's just nervousness around the market regarding supply and probably LNG," a trader said.
There was now focus on cooling demand in Europe, with some regions seeing hot weather, while heatwaves should also lift demand in Asia and the US, impacting LNG prices, the trader added.
"Ongoing concerns about flows from Russia to southern and central Europe, as well as high LNG competition, curbs the downside," analysts at Energi Danmark said in their morning report.
Russian gas producer Gazprom said it would send 42.4 million cubic metres of gas to Europe via Ukraine on Tuesday, unchanged from Monday.
Gas prices have cooled substantially since Russia’s invasion of Ukraine in February 2022 disrupted the market and drove prices to eye-watering levels.
Figures from the Central Statistics Office (CSO) showed Irish firms spent €16.2bn on energy purchases in the year the war broke out, up a staggering 83% on the previous year.
Purchases of electricity and natural gas accounted for 53% of total energy costs incurred by Irish businesses in that period, and firms based in Dublin used 72% of business energy consumption in 2022.
Elsewhere, oil prices were stable, as traders awaited signs of a hoped-for summer demand boost to prop up prices even as strong supply threatens to blunt gains.
Benchmark Brent crude futures were down 2 cents to $84.23 per barrel after climbing in the previous session.
Brent has clambered back from an early-June close of $77.52, though remains off its $90 peaks in mid-April.
Global oil demand growth slowed to 890,000 barrels per day year on year in the first quarter, and data suggests consumption growth likely slowed further in the second quarter..
But US crude inventories are expected to have fallen by 2.3 million barrels in the week to June 14, according to analysts polled by Reuters.
Some analysts remained bullish on the price impact of an extension by the OPEC+ group of supply cuts in the near term.
"The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025," said Patricio Valdivieso, Rystad Energy vice-president and global lead of crude trading analysis.
"Under these conditions — and the disconnect between the OPEC+ demand outlook and all other agencies — it is hard to remain fully bearish when global oil supply growth appears decimated," he added.
- Reuters, with additional reporting by the Irish Examiner
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