European Gas Near 2-Month Lows

European natural gas prices fell toward €41 per MWh, nearing an over two-month low, as shipping activity through the Strait of Hormuz showed signs of normalization following progress in US-Iran peace talks. Three stranded crude oil supertankers successfully transited the waterway earlier this week, while several empty Qatari LNG carriers have entered the Gulf in recent weeks to reload, signaling a potential recovery in gas shipments. Additionally, Qatar's Prime Minister indicated that LNG production is expected to return to normal within a few weeks, apart from the damaged facility. The prospect of resumed LNG flows from the Gulf eased fears of a supply crunch and could help Europe replenish inventories ahead of next winter. These developments offset support from strong power-sector demand amid hot weather and low wind speeds across Europe.

European natural gas prices fell to around €41.6 per MWh as progress in US-Iran talks eased supply risks. The US on Monday authorized Iranian oil sales under a temporary 60-day licence following productive talks in Switzerland over the weekend. Shipping activity through the Strait of Hormuz also began increasing, with more tankers openly transiting the waterway. Meanwhile, conflicting signals emerged after Iranian media denied US claims that Tehran had agreed to readmit IAEA inspectors or had accepted sanctions relief in exchange for reopening the strait and allowing renewed nuclear inspections. For Europe, concerns persisted over its ability to replenish gas inventories before next winter. European storage facilities are currently around 46.4% full, below the five-year average of more than 50% for this time of year. This left the market vulnerable, particularly as forecasts of hotter weather across Europe were expected to increase demand.

European natural gas prices climbed to as high as €43.4 per MWh before trimming gains to around €42.5, amid signs of progress in US–Iran talks. The two countries agreed on Monday to establish communication channels to keep the Strait of Hormuz open and end hostilities in Lebanon. The latest developments came after talks got off to a tense start after Iranian media reported that Tehran had suspended discussions following Trump's latest warning over Iran's support for Hezbollah. Still, investors remain concerned about Europe’s ability to replenish gas inventories ahead of winter. EU gas storage facilities are currently 45.56% full, compared with 54.38% at the same time last year and about 14% below the five-year average, while net injections in June continue to lag seasonal norms. This comes as high temperatures are expected across Europe, which is likely to boost cooling demand.