Europe’s benchmark gas contract touched a 10-week high in early trade, continuing its bullish streak from the previous session amid forecasts of higher demand, short covering and geopolitical tensions over Iran.

The benchmark Dutch front-month contract at the TTF hub (TRNLTTFMc1) rose by 0.80 to 31.27 euros per megawatt hour (MWh) by 0905 GMT, according to LSEG data.

In earlier trade, the contract touched 32.23 euros, its highest level since November 4 last year.

The March contract (TRNLTTFMc2) was up 0.88 euro at 30.43 euros/MWh.

The British day-ahead gas price (TRGBNBPD1) was up 4.20 pence at 84.00 pence per therm.

Temperatures in north-west Europe are forecast to remain at current levels until the weekend and then decrease, which could raise heating demand for next week.

Wind generation is also expected to stay steady until the weekend and then fall after. Lower wind output typically increases demand for gas from power plants.

North-west Europe liquefied natural gas (LNG) send-out is also expected to fall by 97 gigawatt hours per day (GWh/d) to 2,199 GWh/d from yesterday, LSEG data showed.

Geopolitical tensions over Iran have also raised the risk of disruption to LNG supply chains.

“First, there are potential risks to LNG flows from the Persian Gulf. Second, there’s the potential for disruptions to Iranian gas flows to Turkey,” said analysts at ING.

“Given the large TTF fund short, it wouldn’t take much to move the market as funds run in to cover shorts,” they added.

On Monday, U.S. President Donald Trump said any country that does business with Iran will face a tariff rate of 25% on any trade with the United States.

In the European carbon market, the benchmark contract (CFI2Zc1) was up 0.86 euro at 90.96 euros a metric ton.
Source: Reuters