Strong LNG supply, storage levels continue to weigh on prices

May 5 (Reuters) - The European benchmark gas price lifted from a fresh 21-month low on Friday morning but remains weighed down by healthy supplies of liquefied natural gas, well-filled storage sites and moderate weather. The Dutch TTF front-month contract on the Intercontinental exchange (ICE) was up by 0.18 euros at 35.83 euros per megawatt hour (MWh) by 0929 GMT.

Earlier on Friday, it fell to 35.13 euros/MWh, its lowest point since July 2021.

Weather runs looked mild or around normal levels and arrivals of liquefied natural gas (LNG) remained strong, a trader said.

While Europe should see unsettled weather until May 20, temperatures will be above normal initially before dropping to near or below normal from next week, Refinitiv meteorologist Georg Mueller said.

Norwegian gas system operator Gassco reported an outage at Norway's Hammerfest LNG plant until mid-May, but the return of the massive Troll field from maintenance from next week will increase Norwegian supply. (

Meanwhile, Europe's gas storage sites are 60.5% full, the latest data from Gas Infrastructure Europe showed.

Assuming demand and LNG imports remain at current levels, inventories would reach a 100% fill rate by the end of August, analysts at Morgan Stanley said in a note.

"This would be problematic as inventories normally do not start drawing until late October," they added.

To prevent such a "tank top" scenario, LNG imports would need to fall around 150 million cubic metres per day, or 35% compared with the average of the last six months, for several months over the summer, they said.

For LNG supplies to slow, TTF prices must fall below the Japan-Korea LNG price to incentivise diversions to Asia, leaving downside for European prices over the summer, Morgan Stanley said.

In the British market, the day-ahead contract fell by 1.5 pence to 79 pence per therm, Refinitiv Eikon data showed.

In the European carbon market, the benchmark contract rose by 1.53 euros to 86.20 euros a tonne.