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EMEA Natural Gas Update: Futures Edge Lower Amid Conflicting Signals on US-Iran Talks

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European natural gas futures slipped slightly in after-hours trade Thursday as progress stalled on resolving Middle East conflicts, easing back after a almost 4% gain in the prior session driven by renewed Middle East tensions earlier in the week.

The Dutch TTF front-month contract edged down by 0.233% to 48.75 euros ($56.68) per megawatt-hour, while the UK NBP front-month contract lost 0.399% to 118.37 British pence ($1.59) per therm.

While US President Donald Trump reportedly said negotiations were going well, Iranian state media cited Iranian officials saying there was no progress. The ceasefire appeared on the verge of collapsing earlier this week after Iranian media reported that Tehran had cut off talks with the US due to Israel's military campaign in Lebanon.

However, the Wall Street Journal on Wednesday reported that US President Donald Trump privately told advisers he would consider ending the ceasefire with Iran if Tehran kills US troops.

Trump reportedly appeared reluctant to restart the war and may tolerate limited flare-ups for weeks or months to avoid a broader Middle East conflict.

"The continued lack of progress toward ending the conflict is increasing the risk that flows from the Persian Gulf could remain disrupted for an extended period. This has fueled concerns that Europe could struggle to rebuild gas inventories ahead of winter," Trading Economics said.

Gas Infrastructure Europe said EU inventories stood at just over 41% of capacity, compared with around 50% at this time last year.

Europe could face a significant natural gas supply squeeze and be forced to pay sharply higher prices for LNG if the Strait of Hormuz remains closed through the summer, Oxford Institute for Energy Studies strategists said in a note on Wednesday.

The OIES pegged spot prices above $20/MMBtu in Europe and Asia may be needed to curb demand and rebalance global flows.

It said Europe needs about 70 Bcm of LNG imports to reach roughly 80% storage by Nov. 1, in line with 2025 levels, but explains that storage might instead reach about 70% due to lost Middle Eastern supply and stronger Asian competition. Reaching even 70% would require non-European LNG demand to fall by about 13 Bcm over the summer, or 2.2 Bcm per month and preliminary May data show little evidence of such demand destruction.

ANZ analyst Daniel Hynes said in a note on Thursday that North Asia LNG prices are pushing towards $19/MMBtu as shortages are already emerging. LNG stockpiles held by Japanese utilities fell to 1.91 metric tons, down 2% from a week earlier and sit at the lowest level since February.

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