European wholesale natural gas prices hit fresh 2022 highs on Monday, rising for a fourth straight session. Supply risks tied to the Middle East conflict and low EU storage levels drove the move ahead of winter peak demand.
The Dutch TTF front-month contract rose 3.6% to 97.19 euros per megawatt-hour, its highest level in nearly four years. The British NBP contract jumped 3.7% to 239.33 pence per therm, matching the 2022 peaks.
Last week, Dutch contracts rallied nearly 7% and British gas gained over 6%.
Gulf disruptions keep LNG supply tight
Markets are watching energy flows through the Persian Gulf after last week's escalation, in which Houthi drone and missile strikes hit Saudi transport and energy facilities in Dammam and Shaybah.
Reports over the weekend said Qatari mediators were in Tehran coordinating with Washington on de-escalation. Even so, energy trading desks remain skeptical of an immediate breakthrough, while Iranian officials insist on concessions before formal dialogue.
Meanwhile, disruptions in the Strait of Hormuz continue to curb seaborne tanker operations. Middle Eastern LNG deliveries to Europe are roughly 80% below year-earlier levels because of reroutings around the Cape of Good Hope.
EU storage at its lowest late-October level since 2009
European Union underground gas storage sits at roughly 74.6% of capacity, the lowest seasonal volume for late October since 2009. Temperatures are starting to dip, and some member states have begun early withdrawals from salt caverns.
Utilities in the region are also competing with Asian buyers for uncommitted Atlantic basin LNG cargoes, which prevents any meaningful price softening.
Energy costs keep inflation pressure on central banks
With natural gas and international crude benchmarks both at multi-month highs, headline inflation risks in the eurozone and the United Kingdom are set to stay elevated. The European Central Bank and the Bank of England are widely expected to hold rates in their immediate deliberations. Even so, money markets have priced in follow-up 25-basis-point rate hikes before the end of the year.
Source: Investing.com
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