European natural gas futures edged higher on Friday, stabilising after several volatile sessions as benchmark contracts headed towards a fourth consecutive weekly increase after reaching their highest levels since 2023.
The front-month Dutch TTF contract rose modestly, trading near €72.50 per megawatt-hour (MWh) and putting the European benchmark on course for a weekly gain of more than 8%.
In Great Britain, the equivalent NBP wholesale gas contract held near 179 pence per therm and was heading for a weekly increase of more than 9%, following Monday’s UK bank holiday.
Strait of Hormuz Disruption Remains in Focus
Gas markets continued to assess supply risks following military strikes involving U.S. forces and Iran and the resulting disruption to commercial tanker traffic through the Strait of Hormuz.
While Washington has maintained that international shipping lanes remain open, satellite tracking data cited in the report indicated that commercial vessel traffic through the waterway was running at a fraction of normal pre-war levels.
The Strait is an important route for global liquefied natural gas supplies, including exports from Qatar, with approximately 20% of worldwide LNG supply potentially exposed to disruption through the waterway.
U.S. President Donald Trump has warned of further strikes against Iranian infrastructure and raised the possibility of targeted action against Kharg Island.
European utilities are consequently competing with Asian buyers for alternative LNG cargoes from the Atlantic basin as markets assess the availability and cost of replacement supplies.
European Gas Storage Levels Stand at Around 62%
The supply uncertainty comes as Europe approaches the later stages of its summer storage injection season ahead of winter demand.
Data from Gas Infrastructure Europe showed European underground gas storage facilities at approximately 62% of capacity, below the five-year seasonal benchmark.
Storage replenishment during August was affected by higher gas-fired power generation during summer heatwaves in Southern Europe, scheduled maintenance on Norwegian offshore pipelines and delays to Qatari LNG shipments.
These factors have increased attention on the pace of storage injections during the remaining period before winter heating demand rises.
Higher Energy Prices Add to ECB Policy Considerations
The increase in European natural gas prices has coincided with Brent crude trading above $90 a barrel, adding to attention on the potential effect of energy costs on inflation.
The European Central Bank is due to hold its next Governing Council meeting on September 10.
Preliminary August data showed eurozone core inflation easing to 2.4%, while headline consumer price inflation accelerated to 3.3% year on year. Energy components increased 14.3%.
The combination of higher energy prices, inflation developments and signs of slower regional economic growth will form part of the economic backdrop assessed by policymakers as they consider the outlook for monetary policy.
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