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EMEA Natural Gas Update: Prices Fall on Possible Middle East Peace Talks

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European natural gas futures rebounded from a session low in after-hours on Wednesday, but remained negative for the day as optimism over potential US-Iran peace talks eased supply concerns caused prices to soften again.

The front-month Dutch TTF contract fell 4.580% to 53.360 euros ($61.61) per megawatt-hour, while the front-month UK NBP contract declined 4.409% to 130.750 British pence ($1.76) per therm.

Dutch TTF prices traded as low as $51.69 euros/MWh earlier in the day.

Qatar said US-Iran mediation efforts have reached an advanced stage, with a draft proposal already prepared, while US officials expressed optimism that an agreement could be reached soon, Trading Economics said.

Under a proposal being discussed, Iran and Oman would reach an agreement giving Tehran control over ships entering the Gulf through the Strait of Hormuz. Washington has yet to respond, news outlets reported.

Despite recent price declines, the European gas market remains supported by tight fundamentals. Gas Infrastructure Europe data showed EU storage was 57.66% full, down from 69.62% a year earlier. Trading Economics said inventories were at their lowest level for this time of year in nearly 20 years. Storage also remained well below the five-year average of 74.1%, according to the Swiss Federal Office of Energy.

Celsius Energy forecasts EU inventories will peak at 2,737 Bcf on Oct. 31, 751 Bcf below the five-year average and equal to about 70% of the bloc's estimated 3,914 Bcf working gas storage capacity.

Low inventories coincide with record cooling demand as a prolonged heatwave and drought across Europe disrupt river-cooled nuclear power plants and curb hydroelectric generation, tightening the region's power supply.

ANZ analyst Daniel Hynes said Asian buyers have returned to the spot LNG market to secure additional cargoes amid robust demand and supply constraints, adding competition for available shipments.

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