European natural gas prices stabilized near one-week lows on Thursday, as energy markets weighed tentative diplomatic progress in the Persian Gulf against persistent supply constraints ahead of the winter heating season.
The benchmark Dutch front-month natural gas contract traded virtually flat at €65.61 per megawatt-hour, following a 3% decline in wholesale prices on Wednesday. British wholesale gas futures held at 160.50 pence per therm, while Brent crude found support around $87.40 per barrel after four consecutive sessions of decline.
Diplomatic developments in the Strait of Hormuz provided the primary support for prices. Reports indicated that Washington and Tehran were making progress toward an interim ceasefire agreement that includes protections for commercial shipping through the critical maritime chokepoint. Qatar’s Prime Minister traveled to Tehran to assist in mediating negotiations aimed at restoring unhindered transit, further easing supply concerns.
Underlying supply pressures in Europe remained intact, however. Underground storage facilities across the bloc hovered near 62% capacity, according to data from Gas Infrastructure Europe, as elevated summer power generation demand from continental heatwaves and delayed Qatari liquefied natural gas cargoes hampered seasonal storage injections. ING analysts noted that regional storage injections running behind schedule risk leaving European hubs unable to meet EU-mandated targets before cold weather sets in, sustaining a structural risk premium on prices.
The United States offered a partial buffer to the regional deficit. U.S. gas stockpiles stood nearly 8% above their five-year average, according to UBS research, while robust domestic production and expanding LNG export capacity are expected to ease Western European structural deficits as new terminals and pipeline infrastructure approach completion toward the end of the year.
