European Natural Gas Rebounds

European natural gas prices rose to around €59.8 per MWh on Wednesday after falling in the previous session, as traders assessed diplomatic efforts aimed at reaching a Middle East deal that could pave the way for the resumption of LNG shipments through the Strait of Hormuz. Pakistan’s defense minister said the US and Iran were “close to some sort of arrangement” over the waterway, while negotiations between Tehran and Oman were also reportedly making significant progress. However, uncertainty over a swift reopening of the strait persists, with both sides taking firmer positions. The ongoing disruption to shipping has severely constrained LNG shipments, leaving shipments from major exporter Qatar significantly delayed. Analysts expect European gas prices to maintain a firm floor until storage levels show clearer signs of building before the heating season begins. Hot weather across Europe is also boosting electricity demand for cooling, adding further pressure to the market.

European natural gas prices fell to €60 per megawatt-hour as hopes for progress in US-Iran negotiations eased concerns over energy supplies. Pakistan’s Defense Minister Khawaja Asif said the two sides were “close to some sort of arrangement,” while talks between Iran and Oman over reopening the Strait of Hormuz were reportedly at an advanced stage. A deal could help restore LNG flows through the Persian Gulf and reduce pressure on European gas markets. Despite the optimism, Commerzbank raised its year-end European gas price forecast to €50/MWh from €45/MWh, while Uniper expects prices to remain around €50-€60/MWh as long as Hormuz remains closed. European storage levels recently fell to the lowest seasonal levels in records going back to 2009, heightening concerns over winter supplies. Meanwhile, persistent European heatwaves are boosting power demand and adding further pressure to gas markets.

European natural gas prices climbed to €61.8 per MWh on Tuesday, extending Monday's rally, as the prospect of a deal to reopen the Strait of Hormuz faded amid demands from the US and Iran. President Trump on Monday called for Iran to compensate for people it has killed in conflicts, after Tehran sought compensation for damage caused by US and Israeli attacks. This tempered hopes for an immediate resolution that would restore LNG flows through the Persian Gulf. The ongoing disruption has tightened global LNG supplies, intensifying competition with Asian buyers and hampering Europe’s efforts to replenish gas stockpiles before winter. European storage levels recently fell to the lowest seasonal levels in records going back to 2009, heightening concerns over winter supplies. Traders also monitor the extended supply cuts at the Ormen Lange gas field in Norway, Europe’s largest pipeline supplier, as this could further tighten Europe’s already strained gas market and amplify price volatility.