European and British wholesale natural gas prices were relatively stable on Monday following several weeks of gains, as traders assessed escalating military activity in the Middle East alongside signs of a partial recovery in regional energy supplies.
The benchmark Dutch front-month natural gas contract declined 0.2% to €74.50 per megawatt-hour, remaining close to its recent multi-week highs.
In Britain, the equivalent wholesale natural gas contract fell 0.5% to 187.00 pence per therm.
Middle East Developments Remain in Focus
Yemen’s internationally recognised, Saudi-backed government announced a military campaign aimed at retaking territory controlled by Iran-backed Houthi forces.
Houthi forces subsequently launched ballistic missiles and attack drones targeting Saudi Aramco energy facilities south of Riyadh, increasing concerns about potential disruption to regional energy infrastructure.
However, Saudi Arabia has partially restored operations on its East-West Pipeline and resumed tanker loadings from the Red Sea port of Yanbu following earlier disruptions, providing some recovery in regional supply operations.
European Gas Storage Remains Below Last Year
European gas storage levels remain a consideration for the market as the region approaches the winter heating period.
Underground natural gas storage across the European Union is approximately 12 percentage points below levels recorded at the same point last year, reducing the available inventory buffer in the event of colder weather or supply disruptions.
Bank of America analysts said higher energy prices associated with the Middle East conflict were contributing to inflation and interest-rate pressures, which in turn were weighing on economic growth.
However, the bank does not expect a significant recession driven by energy costs, saying that “energy prices and interest rates are not high enough to suppress demand.”
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