Europe’s benchmark natural gas prices rose by 2% in early trade in Amsterdam on Monday, as the United States and Iran are again locked in a stalemate over negotiations and conditions for reopening of the Strait of Hormuz.
The front-month futures of the Dutch Title Transfer Facility (TTF), the benchmark for Europe’s gas trading, were up by 2.15% at $83.76 (73.62 euros) as of 7:15 a.m. Amsterdam time on Monday, after falling last week by about 9%.
The new move higher was triggered by growing concerns that LNG supply out of the Strait of Hormuz would not be returning to normal soon, while Europe is approaching the winter months with historically low levels of natural gas at storage sites.
This weekend, U.S. President Donald Trump rejected a proposal by Iran to begin negotiations on a peace deal, which sent oil prices rallying by 2% in Asian trade.
European gas prices in turn reflect the tight global markets, with most of Qatar’s LNG supply still offline and no visibility on when some semblance of normal shipping of LNG cargoes would return at the Strait of Hormuz.
Some Qatari and UAE cargoes have managed to transit the Strait of Hormuz in recent weeks, but these are too low to move the needle of the global LNG balance.
As of September 27, gas storage sites in the EU were just below 71% full, per data by Gas Infrastructure Europe, compared to over 80% for this time of year in the past five years. Some major economies, including the biggest, Germany, have even lower-than-average gas stored so far this filling season. Germany storage sites, for example, are just about 57% full, which has prompted concerns about supply security if the coming winter turns out much colder than previous winters.
“Despite lower storage levels compared to historical levels, the Commission and EU countries reconfirmed that EU gas supply remains stable,” the European Commission said last week following a meeting of the Gas Coordination Group, which advises the Commission on coordinating security-of-supply measures in the event of an EU or regional emergency.
By Tsvetana Paraskova for Oilprice.com
