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EMEA Natural Gas Update: Futures Slide After Trump Pauses Strikes, Signals Talks With Iran

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European natural gas futures dropped on Monday after tensions between the US and Iran eased over the weekend, with diplomatic negotiations set to resume.

The front-month Dutch TTF contract fell 2.73% to 57.460 euros ($67.50) per megawatt-hour, while the front-month UK NBP contract dropped 2.52% to 140.650 British pence ($1.89) per therm.

While addressing reporters on board the Air Force One on Sunday, US President Donald Trump said that negotiations with Tehran were set to begin on Monday, with the "perimeter" of a deal already in place, as he paused what he described as "the biggest attack since World War Two" against Iran.

Iran's Foreign Ministry Spokesperson, Esmaeil Baghaei, has, however, denied these claims, saying that the country wasn't holding any talks with the US at the moment, according to a report by Al Jazeera.

On Monday, Baghaei said that Iran was currently only negotiating with Oman, regarding the future shipping route via the Strait of Hormuz, according to a report by multiple media outlets.

Meanwhile, traffic through the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, stood at 11 on Sunday, according to ShipFinder.

These developments offer much-needed respite for European markets, which are competing with Asia for cargoes to refill inventories ahead of the winter heating season.

The average volume of daily LNG imports into Asia "has remained above the seasonal average since April," according to Daniel Hynes, a senior commodity strategist at ANZ, putting pressure on European importers.

European gas inventories remained below historic levels, at just 57.11% of capacity, compared to 68.85% during the corresponding period a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 73.5%, according to the Swiss Federal Office of Energy.

The situation is further exacerbated by another heatwave headed for Western, Central and Mediterranean Europe, with temperatures expected to go north of 40 degrees Celsius, according to Severe Weather EU, keeping cooling demand and gas-fired power generation elevated in the near-term.

High temperatures have also hit nuclear power generation across Europe, as river water levels decrease, leading reliable power plants such as Hungary's Paks to significantly scale down operations, as reported by.

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