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EMEA Natural Gas Update: Futures Slide Over 4% Hopes of Progress to US-Iran Peace

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European natural gas futures were down by over 4% on Friday amid some optimism regarding a peace deal with Iran, based on comments the previous day from the US Secretary of State.

The front-month Dutch TTF natural gas contract declined 3.93% to 47.465 euros ($55.10) per megawatt hour, and the UK front-month NBP contract dropped 4.30% to 115.630 British pence ($1.55) per therm.

Both Dutch TTF and UK Gas were set to end the week down by 4.80% and 6.03%, respectively, according to TradingEconomics.

On Thursday, US Secretary of State Marco Rubio said that there were "some good signs" that a deal could be reached between the US and Iran, bringing an end to hostilities in the region. He, however, added that he doesn't "want to be overly optimistic," while addressing reporters in Washington.

Pakistan's Interior Minister, Mohsin Naqvi, met Iranian Foreign Minister Abbas Araghchi for the second time in a week on Friday to help resolve differences between Washington and Tehran, according to a report by Tasnim News Agency.

This comes after Iran's Supreme Leader, Ayatollah Mojtaba Khamenei, issued a directive on Thursday, forbidding the country's enriched uranium from being sent abroad, hardening his stance on a key US demand, according to a Reuters report that quoted two senior Iranian officials.

Meanwhile, the Islamic Revolutionary Guard Corps confirmed that they had coordinated the safe passage of 31 commercial vessels through the Strait of Hormuz, according to the Iran Students News Agency.

This news was confirmed by the Hormuz Strait Monitor, as the strategically crucial waterway remained effectively closed for the 12th week running.

Despite the decline in European natural gas prices, the persistent "summer premium over winter gas prices is making gas stockpiling uneconomical," according to Daniel Hynes, a senior commodity strategist at ANZ, who also noted that storage injections had slowed sharply in recent weeks, as a result.

Hynes also noted that the supply situation in Europe was made worse by seasonal maintenance at major gas facilities, including in Norway, the region's largest piped gas supplier.

European natural gas inventories remained depleted at 36.99%, compared to 45.16% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 51.00%, according to the Swiss Federal Office of Energy.

Analysts at Mind Energy continue to expect bullish momentum in European natural gas prices, although growing optimism surrounding a potential peace deal has started to introduce some bearish pressure into the market.

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