European Natural Gas Steadies as US and Iran Weigh New Talks
(Bloomberg) -- European natural gas steadied as broader markets weighed efforts by the US and Iran to make their way back to the negotiating table.
Benchmark futures hovered between small gains and losses, with trading volumes picking up after a tepid start in Asia.
Washington and Tehran are in discussions on holding more negotiations for a longer-term ceasefire, people familiar with the matter said. The goal is to hold them before a two-week ceasefire announced April 7 expires, they said.
Energy markets have been roiled by the conflict in the Middle East and the near-closure of the Strait of Hormuz, which has cut about a fifth of the world’s liquefied natural gas from global markets.
Earlier this week, the US raised the stakes with its own blockade of vessels heading for or leaving Iran’s Persian Gulf ports or coastal areas. That’s added nervousness to an already volatile market, which is also coping with extended trading hours amid relatively low liquidity.
Asian LNG imports have dropped to the lowest in almost six years, potentially offering some respite to European buyers competing for the fuel. Europe needs more LNG this year to replenish its depleted gas inventories in time for next winter, and traders remain on high alert.
There’s still a risk of escalation and European gas prices face a “significant upside risk,” Bloomberg Intelligence analyst Patricio Alvarez said in a note. BI’s “extended conflict scenario” implies the European price could double or even triple from current levels, with Asia at greater risk of sharper spikes.
Dutch front-month futures, Europe’s gas benchmark, traded little changed at € a megawatt-hour by 8:58 a.m. in Amsterdam.
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