(Bloomberg) -- European natural gas prices rose for the second consecutive session, with traders fixated on near-term supply risks, from tensions in the Middle East to production outages in Norway.
Benchmark Dutch futures closed above €40 a megawatt-hour after fluctuating earlier. While demand for the fuel remains relatively low and gas stockpiles are high, the market remains vulnerable to disruptions.
The bullish sentiment intensified following Equinor ASA’s shutdown of production at a platform in the North Sea early Tuesday after smoke was detected. Europe’s top supplier said its total gas shipments won’t be affected, declining to elaborate further.
Escalating tensions between Israel and Iran are also having an impact, with contracts for delivery in November widening their premium over the 2025 equivalent in recent weeks. Options contracts for this November have also been more costly to insure than those for next winter.
“The market grapples with uncertainty around supply and demand,” Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie Ltd., said at an industry event in London.
Regulatory and policy changes — such as the temporary halt of US approvals of new liquefied natural gas export facilities — are also leading to volatility, even with European gas demand set to decline for a third consecutive year, according to Di Odoardo. “As economic conditions improve, we do expect some upside, but part of that demand might not come back,” he said.
Europe’s winter could also be colder than last year, according to some forecasters, as a weakened La Niña weather pattern finally arrives. That would raise demand for the fuel used in heating.
Dutch front-month futures, Europe’s gas benchmark, closed 1.7% higher by 6 p.m. in Amsterdam. Meanwhile, the November 2025 contract closed at €39.67.
--With assistance from William Mathis and Anna Shiryaevskaya.
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