Prices mixed on Middle East concerns, strong power demand

LONDON, April 19 - Dutch and British wholesale gas prices were mixed on Friday morning amid heightened tensions in the Middle East, Norwegian outages and expectations of increased demand from the power sector as wind speeds drop.

The benchmark front-month contract at the Dutch TTF hub slipped 0.97 euro to 31.34 euros per megawatt hour (MWh) by 0826 GMT, while the June contract was 0.98 euros lower at 31.40 euros/MWh, ICE data showed.

In the British market, the day-ahead price rose by 0.40 pence to 79.50 pence per therm, according to LSEG data, while the within-day contract rose by 0.50 p to 80.50 p/therm.

Israel launched an attack on Iranian soil on Friday, sources told Reuters, the latest tit-for-tat exchange between the two countries that threatens to drag the region deeper into conflict.

“Heightened tensions in the Middle East following an Iranian drone and missile attack on Israel increases the risk that Middle Eastern LNG supply will be shut in,” analysts at Energy Aspects said.

If this were to happen, European gas prices would need to rise to attract LNG cargos and compete with Asian buyers, the analysts said.

However high gas stocks and weak demand in the summer months will also weigh on prices, they said.

The benchmark TTF contract initially opened higher, tracking gains in the oil market, but slipped as oil prices retraced earlier gains.

Ongoing cuts to supply due to maintenance in Norway and increased demand from the power sector are also expected to influence prices over the coming days.

“The latest German wind for power forecast expects power output to drop from 744 gigawatt hours/day (GWh/d) today to 156 GWh/d on Monday next week,” LSEG analyst Tomasz Marcin Kowalski said.

In Britain, peak wind power generation is forecast at 14.5 gigawatts (GW) on Friday, dropping to 7.6 GW on Saturday, Elexon data showed.

In the European carbon market, the benchmark contract was down 1.40 euros at 70.13 euros per metric ton. (Reporting By Susanna Twidale; editing by Nina Chestney)