Prices steady as warm weather offsets LNG concerns

May 3 - Dutch and British wholesale gas prices held steady on Friday morning as warmer forecasts limited some of the upside momentum sparked by expectations of intensifying competition from Asia for liquefied natural gas (LNG) deliveries.

The benchmark front-month contract at the Dutch TTF hub was down 0.30 euros at 30.50 euros per megawatt hour (MWh) at 0821 GMT, after briefly hitting 31.20 euros/MWh earlier, the highest level since Apr. 19, LSEG data showed.

The "extremely comfortable" current European gas storage levels at 63% full, milder-than-usual weather forecasts over the next two weeks and a recovery in Norwegian flows have offset LNG supply concerns, analysts at ING said in a note.

"We continue to hold a bearish view on the European natural gas market," they said.

The latest weather forecasts showed a stronger tendency towards high pressure over Northern Europe towards the end of next week, LSEG meteorologist Georg Mueller said.

Norwegian gas supply nomination stood at 291.7 million cubic metres (mcm) per day on Friday morning, up from 283.2 mcm/day on Thursday, Gassco data showed.

On Thursday, "global gas prices rose as emerging supply side issues threaten to suppress next winter's inventory rebuild", Daniel Hynes, senior commodity strategist at ANZ bank said in a daily note.

Demand in Asia was up amid a heatwave, while Egypt, traditionally an LNG exporter, has rented a floating LNG storage and regasification terminal (FSRU) to help cover strong domestic demand, he highlighted.

The Hoegh Galleon FSRU will be deployed in Egypt for an interim period of June 2024 to February 2026, the ship's owner Hoegh said.

Analysts at Energy Aspects said TTF prices below 32 euros/MWh, or $10/mmbtu, increases demand for LNG from outside Europe, with buying particularly strong around $7–8/mmbtu, or 22-25 euros/MWh.

They forecast supply to Europe for the April–October period to be down by 10 billion cubic metres (bcm) year-on-year, primarily on lower LNG imports, and demand to be down by 6 bcm at 165 bcm.

This still supported enough injections for European storage to again fill to near tank tops by end-October, Energy Aspects said.

Further in, the Dutch day-ahead contract was flat at 30.90 euros/MWh.

In the British market, most contracts had yet to trade, but the weekend contract was down 2.50 pence at 73.50 pence per therm, LSEG data showed.

Monday will be a national holiday in Britain.

In the European carbon market, the benchmark contract was up 0.27 euros at 72.78 euros per metric ton. (Reporting by Nora Buli; editing by Nina Chestney)