European natural gas futures were mixed on Tuesday, as the Dutch TTF contract fell by more than 2% in after-hours trade, easing tensions in the Middle East after the US signaled it would not retaliate following Monday's Iranian attacks.
The front-month Dutch TTF contract was down 2.416% at 46.98 euros ($54.98) per megawatt-hour, while UK NBP futures were up 2.569% at 114.98 British pence ($1.56) as the markets were closed on Monday, due to the Early May Bank Holiday.
The Dutch price decline followed comments from US officials who downplayed the risk of renewed conflict with Iran after Monday's incidents in the Strait of Hormuz and missile strikes targeting the UAE. According to Washington, the events did not violate a ceasefire that has held for nearly a month, helping to steady market sentiment.
Although prices have climbed about 40% since the onset of the conflict, they have recently moderated as demand from Asia has weakened, Trading Economics said.
Since hostilities began in late February, liquefied natural gas shipments from the Persian Gulf have been significantly disrupted, affecting roughly one-fifth of global supply. The supply shock has heightened concerns in Europe, where countries are working to replenish gas storage ahead of the winter season.
Gas Infrastructure Europe puts current EU inventories at 33.79% of capacity, significantly below last year at this time when storage levels hit 41.14%.
Mind Energy said near-term gas contracts are trading at a premium to winter delivery contracts, reducing the financial incentive for companies to inject gas into storage now.
As a result, storage levels remain significantly below historical averages for this time of year. The situation leaves the market exposed to additional risks in the coming months, including potential summer heat waves that could drive up demand and intensified competition from Asian buyers for LNG.