European Natural Gas Rises from 3-Week Low

European natural gas prices rose toward €54 per MWh on Thursday after falling to a three-week low in the previous session, amid lingering concerns over the outlook for gas supplies. Although risk premiums eased after Iran announced it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, the market remained supported by persistent supply-side concerns. LNG shipments through the key waterway continue to face significant disruptions, delaying summer cargoes from major exporters such as Qatar. These delays have complicated Europe's winter stockpiling efforts, while strong competition from Asian buyers has further tightened LNG availability. Meanwhile, unusually hot weather across central and southern Europe has added to market pressures by increasing electricity demand for air conditioning.

European natural gas prices fell to €53.4 per MWh on Wednesday, extending losses for a third straight session and reaching the lowest level in three weeks, as markets weighed prospects of a renewed Middle East deal that could reopen the Strait of Hormuz and restore gas supplies from the Persian Gulf. Qatar said mediation efforts between the US and Iran have reached an advanced stage, with a draft proposal already prepared, while American officials expressed optimism that an agreement could soon be reached. However, concerns persist in Europe amid low gas inventories, with the region’s storage levels now at their lowest for this time of year in almost two decades. With roughly one-fifth of global LNG supply still disrupted by the conflict and Asian buyers competing aggressively for available cargoes, analysts anticipate European gas prices to remain elevated, leaving the market highly sensitive to any delays or setbacks in ongoing diplomatic negotiations.

European natural gas prices have eased to €58/MWh, around 9% lower than the 3-1/2-year high of €63.7/MWh reached on July 24, but they remain nearly 70% above levels seen at the same time last year. Prices continue to be supported by concerns over global LNG supply following the conflict in the Middle East, which disrupted around one-fifth of global LNG flows and hindered Europe's summer stockpiling efforts. EU gas storage is currently only 57% full, the lowest seasonal level since 2009, well below historical averages. While the European Commission remains confident that substantial spare LNG import capacity and a storage target of 80% will be sufficient to meet winter demand, Europe is expected to face intense competition from Asia for available cargoes, keeping upward pressure on prices. Although recent diplomatic signals between the US and Iran have eased oil prices and raised hopes for improved shipping through the Strait of Hormuz, LNG supply risks remain elevated.