UK Natural Gas Futures Stay High on Hormuz Disruptions

UK natural gas prices dropped toward 97 pence a therm, 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.

UK natural gas prices dropped further to around 99.2 pence a therm, amid easing supply concerns following progress in US-Iran talks. 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 several vessels transiting the key waterway on Monday. 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.

UK natural gas prices rose to around 102 pence a therm, extending gains from the previous session despite progress in talks between the US and Iran. The two countries agreed on Monday to establish communication channels to keep the Strait of Hormuz open and end hostilities in Lebanon. The developments followed a tense start to the talks on Sunday after Iranian media reported that Tehran had suspended discussions after President Donald Trump again threatened to strike Iran over its support for Hezbollah. Still, investors remained concerned about Europe's ability to replenish relatively low gas inventories ahead of winter. Prices also found support from forecasts of high temperatures across Europe, which are expected to boost gas demand from power generators.