European natural gas prices extended gains on Wednesday as EU storage levels sank to their lowest point on record for this time of year. Shipping disruptions near the Strait of Hormuz and summer heatwaves across Europe have slowed the pace of storage refilling ahead of the winter heating season.
European natural gas prices pushed higher for a second straight session on Wednesday, as Dutch front-month futures gained 3.3% to trade at 60 euros per megawatt-hour, consolidating near their highest level since July 24. British wholesale contracts firmed 1% to around 149.24 pence per therm, tracking similar upward momentum across regional hubs.
Storage sinks to a historic August low
The rally follows official data showing a worsening inventory deficit across the continent. EU gas storage facilities were filled to just 59.12% of capacity, according to Gas Infrastructure Europe — a historic low for this time of year that raises doubts over whether the bloc can meet its targets before peak winter demand.
Hormuz disruptions and heatwaves slow the refill
Two forces are behind the slow pace of summer refilling. The military conflict involving Iran, the United States and regional proxy forces continues to choke off commercial maritime traffic through the Strait of Hormuz, delaying Qatar-origin LNG shipments to European import terminals. At the same time, intense summer heatwaves across Southern and Central Europe have forced power utilities to burn higher volumes of gas for air-conditioning cooling, diverting supply away from underground storage caverns.
As a result, the market has flipped into backwardation — where near-term prices trade higher than contracts for future delivery — stripping away the commercial incentive for utilities to buy expensive spot gas for storage.
Source: Commodities & Futures News
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