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Europe natural gas futures jump as Hormuz reopening looks uncertain
Benchmark Dutch front-month gas rose more than 10% on Monday, while storage was just below 59% full versus the 76% five-year seasonal norm for this time of year.
Europe natural gas prices surged after weekend talks between Iran and Oman to reopen the Strait of Hormuz failed to reassure traders of a quick restart in global LNG flows, pushing European benchmark futures up more than 10% on Monday, according to LiveMint Markets.
Iran said an agreement was “very close,” but also indicated a deal would not immediately reopen Hormuz, tempering hopes that flows would soon help Europe refill its inventories ahead of winter. LiveMint Markets also highlighted that Europe is now less than three months from the start of its heating season, with gas storage sites hitting the lowest seasonal levels on record going back to 2009.
Storage is currently just below 59% full, compared with a 76% five-year seasonal norm, a gap that has raised concerns about winter supplies. LiveMint Markets cited Citigroup strategists expecting storage of about 74% by the end of October if Middle East LNG exports gradually resume as of mid-August, while noting risks of sharper-than-usual demand if El Niño drives extreme cold spells.
Traders are also monitoring prolonged supply cuts at Norway’s Ormen Lange gas field, which LiveMint Markets described as Europe’s largest piped-gas supplier, and the potential for added price volatility. Dutch front-month futures rose to €61.24 per megawatt-hour by 6:02 p.m. Amsterdam time, and US natural gas futures climbed by the most in more than two months amid a large swing in weather forecasts that sparked short-covering among money managers.
Latest closeNat gas $2.778 ▲4.4%