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EMEA Natural Gas Update: Futures Pare Losses in Later Trade on Supply Issues

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European natural gas futures pared earlier losses in after-hours trading on Monday as supply concerns resurfaced after prices tumbled earlier on reports that the US called off plans to bomb Iran and was pursuing peace talks instead.

The front-month Dutch TTF contract fell 1.999% to 57.890 euros ($66.61) per megawatt-hour, while the front-month UK NBP contract dropped 1.476% to 142.150 British pence ($1.91) per therm.

European gas prices fell to around 57.5 euros/MWh after President Donald Trump said he had canceled a planned weekend attack on Iran, saying Tehran and other Middle Eastern nations had assured him they were working toward a deal, according to Trading Economics. Trump said negotiations were set to begin later on Monday, easing fears after days of escalating tensions that had driven energy prices sharply higher.

However, traders remained cautious after an explosion was reported near a tanker off the coast of Oman, while Iran said it was not engaged in peace talks, keeping concerns over Middle East energy supplies in focus.

European natural gas prices surged 36% in July as renewed fighting fueled worries over liquefied natural gas shipments from the Persian Gulf and Europe's ability to rebuild gas inventories ahead of winter. Storage facilities ended last month about 55% full, below the pace needed to meet pre-winter targets.

On Monday, European gas inventories stood at 57.11% of capacity, compared with 68.85% a year earlier, according to Gas Infrastructure Europe. Inventories also remained well below the five-year average of 73.5% for this time of year, according to the Swiss Federal Office of Energy.

Heatwaves have also strained Europe's energy infrastructure. Hungary's Paks Nuclear Power Plant is expected to shut down for the first time in 44 years because of persistently low water levels in the Danube River.

Still, Atmospheric G2 said Monday that August could end on a cooler, wetter note, with forecasts pointing to lower temperatures, stronger winds and more rainfall across much of mainland Europe, particularly southern regions.

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