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EMEA Natural Gas Update: Futures Trim Losses as Storage, Supply Risks Support Market

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European natural gas prices pared losses in after-hours trade on Thursday as low storage levels, strong cooling demand and stalled Middle East negotiations continued to support the market.

Front-month Dutch TTF eased by 0.485% to 60.725 euros ($70.00) per megawatt-hour, while UK NBP futures declined 0.354% to 149.380 British pence ($2.01) per therm.

Progress toward normalizing shipping through the Strait of Hormuz has stalled as the US and Iran hardened their positions, dimming hopes of a quick resumption of gas flows through the waterway, ANZ's Daniel Hynes said in a note on Thursday.

Meanwhile, cooling demand has strengthened with the onset of the latest heatwave in Europe, while concerns over Norwegian supply have added to market tightness.

Montel said the extension of maintenance at a Norwegian gas field until early February could cause European stocks to fall faster than anticipated over the winter, particularly if coupled with cold weather.

Shell has cut production at Norway's Ormen Lange gas field by about 40% after technical problems forced one of its two subsea compressor stations offline, Oilprice.com reported earlier this week. Production has been reduced by about 8.9 million cubic meters per day from the field's 22.9 million-cubic-meter daily capacity since July 13. The outage, initially expected to end in October, has been extended to Feb. 1.

Meanwhile, European gas inventories stood at 59.32% of capacity, versus 72.31% a year earlier, according to Gas Infrastructure Europe. Stocks were also below the five-year average of 76.5% for this period, according to the Swiss Federal Office of Energy.

"Analysts anticipate European gas prices will maintain a firm floor until storage levels show clearer signs of building before the heating season begins," Trading Economics said.

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