European natural gas set to snap five-week winning streak

Despite Friday’s intraday bounce, the Dutch hub was set for a modest 1.8% weekly decline, breaking a multi-week rally that had pushed European natural gas valuations to fresh high watermarks for the year.

In Great Britain, the equivalent NBP wholesale gas contract similarly advanced 2% on the day to trade near 195.00 pence per therm. For the week, the British contract was also on course to snap its five-week rising streak, heading for a 1.9% weekly loss.

The primary catalyst driving the weekly price pullback was the conclusion of a labor strike across France’s energy sector. Industrial action had constrained regasification and sendout capacity at the Dunkirk LNG terminal - France’s largest import facility - slashing export flows to Belgian and German grids before operations normalized midweek.

Friday’s 2% intraday rebound reflected lingering anxieties over the seven-month Iran war, which shows few signs of near-term de-escalation despite diplomatic overtures.

Attacks on Saudi oil pipeline infrastructure and ongoing Houthi strikes in the Red Sea continue to restrict LNG tanker traffic through the Strait of Hormuz, forcing global shippers to seek costlier alternate routes.

Underlying the daily fluctuations is Europe’s structural inventory crunch. Data from Gas Infrastructure Europe shows EU underground storage caverns sitting at roughly 68.5% capacity, leaving continental utilities vulnerable to cold snaps heading into autumn.

Following rate increases by the Federal Reserve and the European Central Bank - where ECB Governing Council members explicitly cited natural gas and electricity prices as the chief catalyst driving Eurozone inflation above 3% - the Bank of England held its key rate at 3.75% on Thursday, while warning that a rate hike to 4% in November remains likely if energy input costs fail to cool.