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EMEA Natural Gas Update: Prices Soften on MOU Signing ahead of Forecasted Heatwave

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European natural gas futures weakened in after-hours trading on Thursday following reports that the US and Iran had signed a memorandum of understanding remotely, while traders also monitored forecasts for a potential heatwave across Europe.

The Dutch TTF front-month contract fell 2.863% to 40.715 euros ($46.68) per megawatt hour, while the UK NBP front-month contract fell 2.485% to 97.30 British pence ($1.29) per therm.

According to Trading Economics, European natural gas prices fell to their lowest level since Apr. 20 after the interim US-Iran agreement took effect. Pakistan's prime minister said the signing means Iran will "instantly reopen" the Strait of Hormuz and the US will "immediately lift" its naval blockade on all Iranian ports. The agreement provides for the resolution of issues surrounding Iran's nuclear program, as well as broader war-related terms, during a 60-day negotiating period.

Data from HormuzStraitMonitor.com showed that 25 ships transited the Strait of Hormuz during the past 24 hours, while 118 vessels were waiting to cross on the 110th day since the waterway's closure.

Mind Energy said the situation merits close monitoring as "everyone will remain on guard and track the development in the near future."

According to ANZ analyst Daniel Hynes, market attention is now shifting toward replenishing gas inventories ahead of winter.

EU gas storage facilities were 45.29% full, compared with 54.07% during the same period last year, according to Gas Infrastructure Europe data. Storage levels also remained well below the five-year average of 59.6% for this time of year, according to data from the Swiss Federal Office of Energy.

Celsius Energy reported that EU inventories increased by 12 Bcf on June 16, exceeding the five-year average injection by 1.3 Bcf. The company said storage volumes remained 544 Bcf, or 23.8%, below the five-year average and 356 Bcf, or 17%, below year-ago levels. Celsius Energy projects EU storage will reach 71% by Oct. 31, remaining 728 Bcf below the five-year average.

Weather conditions could further complicate efforts to rebuild inventories.

Atmospheric G2 said in a social media post Thursday that Europe is preparing for what could become a record-breaking heatwave. At the same time, the remnants of former Tropical Storm Arthur could increase the likelihood of stronger-than-expected winds across Germany and northeastern Europe next week.

USA Today reported Thursday that Tropical Storm Arthur has been downgraded to a post-tropical low but continues to bring heavy rainfall, creating flash-flooding threats across the Gulf Coast and the southeastern US. Forecasters expect the system's remnants to move eastward, where they could interact with a cold front and a developing low-pressure area in the western Atlantic later this week.

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