European natural gas prices fell sharply after topping €90 for the first time in nearly four years, as some traders took profits following the recent rally.
Dutch benchmark futures fell by as much as 5.3% towards the end of the session, wiping out earlier gains that had taken prices to their highest level since late 2022.
Oil prices also fell amid an unconfirmed report that Qatar and Pakistan had submitted a new proposal to restart negotiations aimed at ending the war in Iran.
Prices remain more than double their levels before the conflict broke out, as low gas stocks in Europe and the continued loss of supplies from the Middle East leave the region vulnerable heading into winter.
“We are seeing a slight correction after approaching the €90 mark,” said Florence Schmit, a senior energy strategist at Rabobank. “However, I think there is scope for prices to move above that level again next week.”
Europe may need to offer higher prices to secure enough fuel cargoes this winter, as Asian demand for liquefied natural gas (LNG) points to fiercer competition for supplies once temperatures start to fall.
Gas storage facilities in the region are now about 75%, full, the lowest level for this time of year in data going back to 2009. The situation is even more acute in Germany, the region’s largest economy, where storage is just over 61%.
Mild weather this month has given European energy companies some room for manoeuvre, allowing them to build gas stocks at a faster-than-usual pace for October. However, traders remain on heightened alert.
Natural gas exports from the Persian Gulf, which accounted for about one-fifth of global LNG supply last year, remain disrupted by the war, with no prospect of a recovery in sight. Asian LNG prices have also risen to their highest level since 2022.
The geopolitical outlook remains uncertain, with Qatar saying that efforts to resolve the crisis between the US and Iran are continuing and have not been halted. The statement follows a recent escalation in attacks on vessels carrying oil and gas, heightening concerns about how quickly gas shipments from the Middle East could resume.
Earlier this week, Iran said it “has no choice” but to seek control of the strategically important Strait of Hormuz.
Dutch futures for delivery next month, the benchmark for European gas, were down 4.2% at €84.32 per megawatt hour. Earlier, they had reached as high as €90.24.