European Natural Gas Holds Range Bound

European natural gas futures rose to €47.5 per MWh but were on track for a weekly loss of over 2%, as markets weighed the prospect of a US-Iran peace deal that could resume flows from the Persian Gulf. Reports suggest that the two sides have reached a draft 60-day ceasefire and a framework for nuclear talks, which now awaits final approval from President Trump. However, comments from US Vice President JD Vance that a deal is "close" but "not there yet" capped price declines. An agreement could restore traffic through the Strait of Hormuz, which has remained largely closed for three months now. Prolonged disruption has raised worries that Europe could struggle to rebuild already relatively low storage levels ahead of next winter. Meanwhile, Europe is experiencing its first major heatwave of the season, with record temperatures forecast in cities such as London, Paris, and Madrid. European gas prices are poised for a second weekly decline, but were up nearly 3% for the month.

European natural gas futures rose above €48 per MWh, recouping losses from the previous session amid continued lack of any concrete resolution to the Middle East conflict despite recent optimism. Negotiations to end the war were thrown back into disarray after the White House denied Iran’s claim that a draft peace agreement was making progress. New US strikes on a military site and other targets near the Strait of Hormuz also highlighted risks to ongoing talks. A deal between the two sides could lead to the reopening of the Strait, which has remained largely closed for three months now. Continued disruption has fueled concerns that Europe may face difficulties replenishing inventories ahead of winter, with current storage levels at around 38%, well below the five-year average of more than 50% for this period. Adding to demand-side pressures, Europe is experiencing its first major heatwave of the season, with record temperatures forecast in cities such as London, Paris, and Madrid.

European natural gas futures fell below €47 per megawatt hour as optimism grew that the US and Iran could reach a deal to reopen the Strait of Hormuz, a key route for global energy supplies. Sentiment improved despite conflicting signals from both sides, with Iranian state television reporting an unofficial draft of an interim agreement while the White House dismissed the report as “a complete fabrication.” The Strait normally handles around 20% of global oil and LNG flows, and a reopening would ease pressure on energy markets. Prolonged disruption has raised concerns that Europe may struggle to rebuild gas inventories ahead of winter, with storage facilities currently about 38% full compared with a five year average above 50% for this period. Adding to demand concerns, Europe is facing its first major heat wave of the season, with record temperatures expected across cities including London, Paris and Madrid.