Prices touch four-month high on gas supply worries

LONDON, May 22 - Dutch wholesale gas prices rose on Wednesday to a four-month month high on concerns that Russia could halt gas flows to Austria's OMV.

The benchmark front-month contract at the Dutch TTF hub was up 0.98 euro at 33.90 euros per megawatt hour (MWh) by 11.16 GMT, according to LSEG data.

The contract earlier hit an intra-day high of 34.11 euros/MWh, its highest level since January.

In the British market, the front-month contract was 2.85 pence higher at 82.20 p/therm.

The OMV news has added "tinder to already smouldering embers given where we are with the Ukrainian-Russian war as well as Middle East situation," said Nick Campbell, director at consultancy Inspired Energy.

"Given the expiry of the transit deal and potential for disruption to LNG supplies it feels very much like the market is taking a risk-off approach," he said.

Austrian oil and gas group OMV said on Wednesday that gas supplies from Russia's Gazprom may be suspended in connection with a foreign court ruling, without identifying the case.

Gazprom has typically shipped around 40 million cubic metres (mcm) of gas a day via Ukraine transit routes in 2024 with around half of this gas going to Austria via pipelines through Ukraine and then Slovakia.

LSEG analyst Tomasz Marcin Kowalski said the market was also watching news that the lead contractor, who is building a Texas liquefied natural gas (LNG) plant for QatarEnergy and Exxon Mobil, filed for Chapter 11 bankruptcy protection on Tuesday, citing challenges at the project.

“Market participants may see this as a potential risk for delaying the ongoing LNG export project in Texas, as Europe is much more reliant on LNG supplies,” he said.

The rise in prices came against a backdrop of higher supply from Norway as maintenance eased.

"On the positive side, some of the Norwegian assets are back online which has increased the output considerably compared to yesterday," analysts at Auxilione said in a daily research note.

Flows began ramping up from Norway's Kollsnes processing plant with total Norwegian exports to the UK up by 24 million cubic metres a day (mcm/d) to 60 mcm/d LSEG data showed.

In the European carbon market, the benchmark contract was 0.02 euro lower at 76.23 euros per metric ton. (Reporting By Susanna Twidale; Editing by Janane Venkatraman and Nina Chestney )