European natural gas prices experienced a sharp decline after reaching a four-year high of €90 per megawatt-hour. The drop came as traders took profits from the recent rally, with benchmark Dutch futures falling as much as 5.3% in late trading. Despite the correction, prices remain more than double pre-conflict levels due to Europe's low gas inventories and ongoing supply disruptions from the Middle East.
Rabobank's senior energy strategist Florence Schmit noted that the retreat followed the €90 ceiling being hit, but she anticipates prices could rise above that level again soon. Europe faces challenges in securing enough fuel cargoes for winter, with Asian demand intensifying competition. Storage levels are currently at 75%, the lowest for this season since records began in 2009, with Germany faring even worse at just over 61%.
The recent price surge is adding pressure on consumers and industry, though governments have so far avoided reintroducing costly price caps or tax cuts. Mild weather has allowed for faster-than-normal storage replenishment, but traders remain cautious due to persistent disruptions in Persian Gulf gas exports and rising Asian LNG prices. Geopolitical tensions, including Iran's threats over the Strait of Hormuz, further complicate the outlook.
As of 5:06 p.m. in Amsterdam, Dutch front-month futures traded 4.2% lower at €84.32 per megawatt-hour, after peaking at €90.24 earlier in the day.