European gas jumps 3% as Middle-East talks hits stalemate

Investing.com - European and British wholesale natural gas prices rebounded on Monday, snapping last week’s sharp pullback as stalled trade talks in the Middle East and a surge in crude oil prices reignited prolonged disruption fears across continental energy hubs.

The benchmark Dutch front-month contract gained 2.8% to trade at 74.10 euros per megawatt-hour (MWh), erasing a portion of Friday’s steep losses.

In Great Britain, the equivalent day-ahead wholesale gas contract matched the continental advance, rising 2.7% to 184.75 pence per therm.

Geopolitical friction halts profit-taking wave

Monday’s price bounce follows a week in which European gas futures posted an 8% weekly decline - their worst weekly performance since mid-June - as trading desks locked in profits and market participants monitored alternative shipping routes bypassing Persian Gulf choke points.

However, the brief diplomatic lull evaporated over the weekend after U.S. President Donald Trump publicly rejected an Iranian proposal to reopen the Strait of Hormuz and end regional hostilities.

Tehran responded by maintaining its strict conditions for unblocking the vital maritime passageway, sending Brent crude surging back past $106 a barrel and prompting energy traders to quickly rebuild risk premia into near-term gas contracts.

Storage deficits and winter heating season loom

Data from Gas Infrastructure Europe shows underground storage caverns across the European Union remaining approximately 11 percentage points below inventory levels recorded during the same period last year.

With global LNG supplies subject to transit friction and elevated Asian spot demand competing for flexible cargoes, any sudden cold spell could trigger rapid inventory drawdowns and spark another leg higher in wholesale energy prices.

Original Article

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