European Natural Gas Futures Poised to End Five-Week Winning Streak

European wholesale natural gas futures are on track to snap a five-week winning streak, pressured by the easing of temporary supply constraints at a key import terminal even as geopolitical risks provided some support during Friday's session.

Price Action

The benchmark front-month Dutch TTF gas contract, a key indicator for European gas prices, rose about 2% on Friday to trade near €78.50 per megawatt-hour (MWh). Despite the daily gain, the contract is poised for a weekly loss of approximately 1.8%, which would end its longest period of consecutive weekly gains in nearly four years.

In the United Kingdom, the equivalent NBP wholesale gas contract also gained 2% to trade around 195.00 pence per therm. It is similarly set to end its five-week rally, with a projected weekly decline of about 1.9%.

Supply and Geopolitical Drivers

The primary catalyst for this week's price pullback was the conclusion of labor strikes in France's energy sector. The industrial action had significantly limited regasification and send-out capacity at the Dunkirk liquefied natural gas (LNG) terminal, France's largest, reducing flows to Belgium and Germany until operations began normalizing mid-week.

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However, Friday's price rebound reflects persistent market anxiety over geopolitical tensions in the Middle East. According to the source, attacks on Saudi pipeline infrastructure and continued disruptions by Houthi militants in the Red Sea are restricting LNG tanker transit through the Strait of Hormuz, forcing some shipments onto longer, more expensive routes.

Market Context and Outlook

Underlying the daily price movements are structural pressures on Europe's energy system. According to data from Gas Infrastructure Europe, the European Union's underground storage facilities are currently filled to approximately 68.5% of capacity. This level suggests that utilities across the continent remain vulnerable to price spikes in the event of a cold snap as the autumn heating season approaches.

High energy costs remain a central concern for policymakers. The European Central Bank has identified gas and electricity prices as primary drivers of Eurozone inflation, which is running above 3%. Meanwhile, the Bank of England held its benchmark rate at 3.75% on Thursday but warned that a rate hike to 4% in November remains a possibility if energy input costs do not cool.