European gas falls more than 10% to €93.18 as risk premium eases
Key Facts
Dutch benchmark natural gas futures for December delivery fell more than 10% on Monday, November 2, recording their biggest daily drop since April 8, according to a Xinhua report published by The Star. The contract stood at €93.18 per megawatt-hour at 18:00 GMT on the trading platform, after exceeding €100 the previous week. The decline followed a rally fueled by fears of energy supply disruptions amid regional tensions. The report linked the easing of the geopolitical risk premium to hopes of renewed negotiations between the United States and Iran. Those hopes eased concerns about further disruption to oil and liquefied natural gas shipments from the Gulf region.
But the diplomatic track produced no breakthrough, according to Reuters’ account of Iran’s talks with Qatari mediators. Iranian Foreign Minister Abbas Araghchi said consultations through mediators had been “intensive” and that Tehran had submitted its conditions and proposals. He added that the outcome depended on “Washington’s political rationality.” Reuters reported that Iranian sources considered a new U.S. attack more likely than an agreement. Prices therefore fell as uncertainty persisted over the outcome of political contacts.
The decline spread to other energy markets, with oil prices falling about 4% on Monday amid hopes that the latest round of mediation would lead to a diplomatic resolution to the crisis, Reuters reported. Shipping risks remained in place: Reuters said a Qatari liquefied natural gas carrier was struck by unknown objects in the Gulf on Friday. The agency quoted the vessel’s operator, Nakilat, as confirming the incident on Sunday. The Xinhua report had said that expectations of renewed negotiations eased concerns about further disruption to oil and LNG shipments. This highlights energy prices’ sensitivity to diplomatic developments as risks to shipping persist.
European storage levels remain a key factor in assessing the market’s readiness for winter. EU gas storage stood at 74.62% of capacity on November 1, according to the Xinhua report, while Germany’s level was 61.03%. The German level was below the 70% storage target, the same report said. This comes after the benchmark contract exceeded €100 the previous week, putting the latest price movement in the context of a market that had surged sharply before falling. Monday’s losses alone do not mean that pressures related to securing supplies during the winter months have disappeared.
Against this market backdrop, Europe’s LNG imports were 30% below their level a year earlier in the week ended October 9, Reuters reported, while the continent’s ability to replace disrupted supplies remained limited. The Dutch front-month gas contract also reached €103.10 per megawatt-hour on October 30, after rising 5.33% that day, marking a four-year high, according to data cited in an Investing.com report. The contract had risen 42.5% during October. The Xinhua report quoted ING commodity strategists as saying tight supplies could keep prices highly volatile throughout the winter. The report added that colder weather could accelerate withdrawals from storage, while Equinor’s chief executive warned, according to Reuters, that prices could rise again if colder conditions boosted demand later in the winter.
The tensions’ broader impact extends beyond wholesale trading: Reuters reported that delays in the pass-through of price changes to retail contracts could mean most of the impact of the increase on consumer bills appears in 2027. On the political track, an Investing.com report citing Reuters said U.S. Vice President JD Vance had direct contact with Iranian security official Mohsen Rezaei to explore paths to de-escalation. Regional mediators continued preparing possible frameworks to end the conflict, the report said. The outcome of the contacts remains tied to Washington’s political stance, according to Araghchi’s remarks. In the gas market, storage levels, LNG imports and weather remain factors shaping developments over the winter, the sources reported.