European Gas Prices Ease as Storage Levels and Shipping Disruptions Remain in Focus

European and British wholesale natural gas prices edged lower on Tuesday after reaching their highest levels since 2023 in the previous session.

The benchmark Dutch front-month TTF contract fell 0.7% to approximately €82.80 per megawatt-hour, compared with Monday’s peak of €83.40.

In Britain, the equivalent NBP wholesale gas contract declined 0.7% to 200.10 pence per therm after reaching multi-year highs.

European Gas Storage at Around 68%

European underground natural gas storage facilities were approximately 68% full, according to data from Gas Infrastructure Europe, below the five-year seasonal average.

The storage position has increased attention on potential disruptions to LNG supplies, particularly those associated with shipping through the Strait of Hormuz.

JERA Chief Executive Yukio Kani said on Monday that lower European storage levels increase the region’s exposure to prolonged shipping disruptions around the strait and competition for spot LNG cargoes.

Brent Crude Rises Above $113

Brent crude increased 1.2% on Tuesday to more than $113 per barrel.

Saudi Arabia blamed Iran-backed groups for an attack on its East-West pipeline and said the resulting disruption could affect supplies equivalent to as much as 4% of global crude consumption.

Further Houthi attacks on Red Sea shipping routes have also affected maritime traffic in the region.

A diplomatic meeting in Oman concerning the passage of tankers through the Strait of Hormuz was postponed, while Qatari LNG export flows through the Persian Gulf remained restricted.

Markets Await Federal Reserve Decision

Energy markets were also monitoring monetary policy developments following the European Central Bank’s decision last Thursday to increase its key interest rate by 25 basis points to 2.50%.

The US Federal Reserve was due to begin its two-day policy meeting on Tuesday. Financial markets were pricing in approximately a 90% probability of a 25-basis-point rate increase.

Higher energy costs remain one of the factors being monitored for their potential impact on inflation and the outlook for monetary policy.