European Natural Gas Rise Further

European natural gas prices staged a sharp afternoon recovery on Friday, reversing earlier losses to trade nearly 3% higher at around €75.80 per megawatt-hour. Prices had opened near €72/MWh before turning upward, as renewed concerns over supply security prompted traders to increase positions ahead of the weekend. Market attention remained focused on potential disruptions to energy shipments through the Strait of Hormuz and continuing uncertainty over deliveries from Qatar. QatarEnergy’s extended force majeure on certain European LNG supplies, covering shipments into late in the fourth quarter, added to concerns about the availability of imported gas. The market is also facing the challenge of replenishing inventories before winter, with European storage facilities around 71% full, significantly below the five-year seasonal average of 87%.

European natural gas prices fell below €72/MWh on Friday, snapping a two-day advance, as softer Asian LNG demand and higher US supplies offered some relief to the European market. US LNG exports rose to 10.9 million tonnes in September, with Europe receiving 5.91 million tonnes, or 54% of total shipments, as buyers refilled inventories ahead of winter. Meanwhile, weaker Chinese LNG demand could free up additional cargoes for Europe, easing competition for spot supplies. Still, EU gas storage is around 71% full, below the five-year seasonal average of 87%, while Germany’s inventories are just above 57%. QatarEnergy has extended force majeure on LNG deliveries to Italy’s Edison until December, while some Qatar-linked LNG vessels have resumed transits through the Strait of Hormuz in recent weeks. Low storage levels leave Europe more exposed to disruptions, as the prospect of renewed US military action against Iran raises concerns over flows through the key shipping route.

European natural gas prices held above €73/MWh, after rebounding from a one-month low, as traders continue to monitor Middle East developments and the bloc’s gas storage levels ahead of winter. Europe’s gas prices have risen 158% so far this year, as uncertainty over the reopening of the Strait of Hormuz continues to affect gas markets, with US-Iran talks remaining deadlocked. European gas storage is around 71% full, well below the five-year seasonal average of 87%, while Germany’s inventories are just above 57%. While some Gulf LNG cargoes have transited the strait in recent weeks, volumes remain too low to materially ease global supply tightness. QatarEnergy has extended force majeure on LNG deliveries to Italy’s Edison until December, while Pakistan's supply arrangements have been extended into November. However, softer Chinese LNG demand offers some relief, with imports expected to fall for a second month, potentially freeing up cargoes for European buyers.