Europe gas: Prices fall > 10% on Iran-Israel ceasefire news
Dutch and British wholesale gas prices across the board fell more than 10% on Tuesday morning on news that Iran and Israel have agreed a ceasefire, removing the risk premium the market had priced in for potential oil and gas supply disruptions.
The benchmark Dutch front-month contract at the TTF hub fell by €4.86 to €36.38 per megawatt hour (MWh), or $12.38/MMBtu, by 0939 GMT, and had traded as low as €35.45/MWh in earlier trade, LSEG data showed.
The British front-month contract was down 13.72 pence at 84.85 pence per therm.
Both contracts are now at their lowest levels since June 11, and with contracts all along the price curve posting drops of around 12% and eroding all gains seen since the first Israeli strikes on Iran.
Tuesday's drop is all down to the news that Israel agreed to U.S. President Donald Trump's proposal for a ceasefire with Iran, a trader said.
"At the open today we have seen an incredible sigh of relief with more than 10% being eroded from the price levels," consultancy Auxilione wrote in its daily market report.
Still, any breach to the ceasefire by any party would likely immediately inject concerns back into the market, they cautioned.
Israel has said Iran has already violated the ceasefire and that it would respond, but Iran has denied the claims.
Gas prices had been trading at 11-week highs before over concerns the hostilities could lead to a closure of the Strait of Hormuz, locking in around 20% of global liquefied natural gas (LNG) supply.
Oil prices are also sharply down on Tuesday.
"Talk of a Hormuz Strait closure and broader war risk has completely faded for now," Arne Lohmann Rasmussen, chief analyst at GRM said.
Gas prices could slide even further to below levels seen before the conflict, reflecting continued high LNG supply and the need for some market participants to unwind long positions, a trader said.
Further in, the Dutch day-ahead contract plunged €4.92 to €36.25/MWh.
The British day-ahead contract shed 9.25 pence to 85.50 p/therm and the within-day contract was down by 11.60 pence at 85.00 p/therm.
In the European carbon market, the benchmark contract was up €0.90 at €74.17 a metric ton.
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