Prices down for on milder temperature forecasts, strong supply

LONDON, Jan 17 - Dutch and British wholesale gas prices were down on Wednesday morning for the third day in a row on strong supply and as forecasts of milder weather was expected to curb gas demand for heating.

The benchmark front-month contract at the Dutch TTF hub was down 0.57 euro at 28.85 euros per megawatt hour (MWh) by 0940 GMT, LSEG data showed.

The March contract fell by 0.69 euro to 28.81 euros/MWh.

In Britain, the day-ahead contract was down 0.75 pence at 73.50 pence per therm.

"The current cold spell is nearing its end, with warmer temperatures expected next week," consultancy Auxilione said.

Temperatures are expected to rise by 4-5 C degrees above seasonal norms next week, while supplies of gas via Norwegian pipelines and shipments of liquefied natural gas (LNG) remain strong.

"The outlook remains stable to bearish for European gas prices (on Wednesday) with no major change in temperature forecasts overnight and nominations for Norwegian gas exports to Europe back to 350 mcm/day," analysts at Engie's EnergyScan said.

"(However) market players should continue to watch out for potential moves in the LNG delivery schedule of Qatari cargoes to European import terminals," they added.

Three of the four tankers used for shipments of Qatari LNG have changed course away from the Red Sea, taking the longer Cape of Good Hope route amid growing tensions in the region.

"If the situation deteriorates, it may lead to some disruptions and longer shipping times in the short term – but where there is flexibility, it's expected that we'd see shifts in trade flows," said analysts at ING.

Trade flow shifts could include U.S. LNG which was destined for Asia being rerouted to Europe, and Middle Eastern LNG moving into Asia rather than Europe.

"Where this becomes more of an issue for the LNG market is if we were to see disruptions in the Strait of Hormuz, as this would put Qatari LNG flows at risk. Qatar shipped an estimated 108bcm of LNG in 2023, making it the third largest supplier with about 20% of global LNG supply," they added.

Europe’s gas stores have started to fall amid the colder weather but are still currently around 79% full according to latest Gas Infrastructure Europe data.

In the European carbon market, the benchmark contract slipped by 0.12 euros to 65.47 euros a metric ton. (Reporting By Marwa Rashad; Editing by Nina Chestney)