Supply tightness expectations had driven European natural gas prices higher, but after the market entered overbought territory, prices edged lower.
The benchmark futures are trading around 96 euros per megawatt-hour, following a cumulative gain of nearly 14% over the previous four trading sessions, with the 14-day Relative Strength Index surpassing 70. That reading signaled to some traders that they could take profits before a reversal.
Multiple factors pushed European natural gas contract prices higher, including tighter global supply caused by Middle East conflicts and fierce competition between European and Asian buyers for cargoes. Prices have roughly tripled year-to-date, with electricity and heating demand gradually recovering as winter approaches.
This week, temperatures have been generally mild, with strong winds in parts of Europe easing pressure on the natural gas market, but forecasts indicate temperatures will begin to fall in the coming days. In addition, wind power is expected to weaken from midweek, dragging down renewable energy generation.
EU gas storage capacity stands below 75%, and despite slight injections in recent days, it remains the lowest for this time of year since records began in 2009. Germany, the largest economy, has a storage rate of just over 61%.
Meanwhile, the geopolitical outlook remains uncertain. Iran's official media, Islamic Republic of Iran Broadcasting, reported that senior officials from Saudi Arabia, Pakistan, and Turkey traveled to Tehran on Monday for consultations, and all parties agreed to continue dialogue.
Comments