European and British wholesale natural gas prices paused on Monday near multi-week highs as traders weighed an escalation in Middle East hostilities against signs of partial supply recovery in the Gulf. Tight European storage levels continue to limit downside as the region enters peak winter demand.
Europe's benchmark gas contract eased from recent peaks on Monday as traders digested conflicting signals from the Middle East. The Dutch front-month TTF contract fell 0.2% to trade at 74.50 euros per megawatt-hour, holding near multi-week peaks. In Great Britain, the equivalent wholesale gas contract dropped 0.5% to 187.00 pence per therm.
Yemen offensive and Aramco strikes keep a geopolitical floor under prices
Yemen's internationally recognized, Saudi-backed government announced a major military campaign aimed at recapturing territory held by Iran-backed Houthi forces. In response, Houthi forces launched ballistic missiles and attack drones targeting Saudi Aramco energy sites south of Riyadh, keeping energy traders on alert for further infrastructure disruption.
However, the immediate market impact eased after Saudi Arabia partially restored operations on its East-West Pipeline and resumed Red Sea tanker loadings from Yanbu following the earlier disruptions.
Winter storage deficits limit the downside
Despite the pause, energy desks say European gas curves retain a structural floor as the region enters peak winter heating season. Underground storage across the European Union sits roughly 12 percentage points below year-ago levels for this point in the season, leaving the continent exposed to early cold snaps or transit bottlenecks.
Analysts at Bank of America said the Middle East crisis is driving higher energy prices that are feeding into inflation and interest rates, which together are holding back growth. Yet the bank does not expect a major energy-led recession, because, according to Bank of America: "energy prices and interest rates are not high enough to suppress demand".
Source: Commodities & Futures News
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