European natural gas futures extended losses in after-hours trading on Thursday, with the regional benchmark slipping back below the key 60 euros per megawatt-hour threshold as improving supply fundamentals outweighed lingering geopolitical risk.
The front-month Dutch TTF contract fell 3.343% to 58.40 euros ($67.33) per megawatt-hour. The front-month UK NBP contract declined 3.503% to 141.30 British pence ($1.90) per therm.
The retreat followed a sharp rally earlier this week after joint US and Saudi military strikes in Iraq and subsequent Iranian missile launches lifted crude oil and natural gas prices on concerns about potential disruptions to regional energy supplies.
Thursday's decline was driven by profit-taking and improving physical supply conditions in Northwest Europe, according to Investing.com. Elevated regional gas prices near 60 euros/MWh have maintained an attractive price spread for Atlantic Basin liquefied natural gas cargoes, supporting continued US LNG deliveries to Europe. At the same time, stable pipeline flows from Norway following the completion of seasonal maintenance have eased near-term supply constraints.
Additionally, news outlets reported that a Qatari gas carrier crossed the Strait of Hormuz with Iran's approval earlier this week, marking the first tanker recorded by shipping-tracking data to leave the waterway since July 11.
The stronger short-term supply outlook is expected to support efforts to rebuild European gas inventories ahead of winter, although storage levels remain well below historical norms.
European gas storage facilities were 56.15% full as of Thursday, compared with 67.59% at the same point last year, according to Gas Infrastructure Europe. Inventories also remain below the five-year average of 72.2% for this time of year, based on data from the Swiss Federal Office of Energy.
Looking ahead, however, weather forecasts could provide support for stronger cooling demand. In a social media post on Thursday, weather forecaster Atmospheric G2 said forecast models are increasingly indicating a hotter weather pattern across parts of Europe between Aug. 10-16.
The latest model runs show growing confidence that a strong high-pressure system will bring above-average temperatures and raise the risk of a heat wave. While one forecasting model continues to indicate somewhat cooler conditions across parts of central and eastern Europe, most major weather models have shifted toward a warmer outlook.