Europe Gas Prices Reach Winter Highs (Update with Mar.1 Prices)
Prompt gas prices on UK and continental hubs soared to new highs for this winter at the close of trading February 28, as icy weather covered much of Europe. (See final para for update on even higher March 1 prices)
UK day-ahead gas at the National Balancing Point (NBP) was £1.15/therm ($16/mn Btu) while at the Dutch balancing hub TTF day-ahead settled at €44/MWh, a similar level in dollar terms. The ramp up in prices was triggered by very high weekday prices early this February 28 morning, with TTF around €50/MWh, a trader told NGW.
There were also some upstream issues at a key Norwegian gas process and export plant at Kollsnes and with the BBL pipeline linking Netherlands and the UK, he added. Moreover traders are concerned that, with every day the cold wintry weather remains over Europe, storage withdrawal capacity goes down; that’s because withdrawal rates are linked to the volume of gas still left in storage.
The high TTF price was not isolated either, with day-ahead closes February 28 at other key continental hubs including Germany’s NCG hub, both French hubs (Peg N and TRS) and Italy’s PSV hub all settling in the €44 to €45 range.
National Grid, which runs the UK gas system, said its 4pm forecast of Britain’s gas demand for March 1 is 411.3mn m³, believed to be the highest this winter, and 11.3mn more than its estimate 24 hours earlier for February 28. The UK Met Office issued Scotland's first red snow warning - meaning there is a risk to life - and it also warned of long interruptions to power supplies and roads becoming blocked by heavy snow.
NGrid's forecast of within-day demand, so at 18hrs February 28, was 396.8mn m3 - believed to be the highest for six years - which compares with a seasonal norm for Feb.28 of 303.4mn m3.
Already on February 27, day-ahead prices (so for gas on February 28) had risen steeply during the day, ending at £0.915/th for UK-NBP, €34.90 for TTF, with many European hubs in the €35 to €37.50 range.
Update 5.50pm GMT, March 1: Tight supply situations across western Europe and rising within-day gas demand estimates in Britain, pushed spot prices even higher at March 1's close, relative to the previous day.
Traders indicated that March 1 UK NBP day-ahead gas (so for supply on March 2) settled at £2.25/th ($31.14/mn Btu) while NBP for weekdays this week traded up to £0.92/th ($12.73/mn Btu), and NBP for this coming weekend settled at £0.85/th. Dutch balancing point TTF settled at €85/MWh ($30.40/mn Btu) and €35/MWh ($12.52/mn Btu) for weekday gas, whereas German NCG settled at €70.025 and €27 respectively - for both price hubs much firmer than a day ago - and both traded at even higher levels for weekday gas earlier in the day. Italian PSV settled at €58.50 for day-ahead and €37 for weekday gas.