European natural gas contracts continued to decline on Thursday, marking a sixth successive session of losses as markets reacted to an interim peace agreement signed by the Presidents of the US and Iran.
The benchmark Dutch front-month contract fell to 40.04 per megawatt hour, while the British natural gas contract slipped beneath the 100 pence per therm threshold to 96.45 pence per therm. Both contracts were moving toward two-month lows as trading progressed.
The interim peace deal, as reported, includes the reopening of the Strait of Hormuz. That development has been a central factor in the retreat of a war-related risk premium that had been influencing European energy markets for months. Traders and desks that had priced in elevated risk tied to disruptions in the region began to pare back those premia once the possibility of renewed maritime transit emerged.
However, the market reaction has been tempered by explicit political caveats tied to the pact. While the agreement was signed by the two Presidents, one of the leaders signalled a willingness to resume attacks should the other side fail to honour commitments. That stated contingency has left observers and market participants cautious, and it helps explain why gas benchmarks, despite approaching two-month lows, have not reverted to pre-war levels.
In short, the interim accord has encouraged an unwind of elevated risk pricing, particularly given the prospect of the Strait of Hormuz reopening, but lingering threats tied to the agreement have preserved a degree of scepticism in price formation. Markets appear to be discounting an improved flow outlook while keeping a margin for possible renewed geopolitical friction.
Market context
- Sixth straight session of declines for European natural gas contracts.
- Dutch front-month: 40.04 per megawatt hour.
- British contract: 96.45 pence per therm, below the 100 pence mark.
- Both contracts heading toward two-month lows.
Note: The article reports the movements and political comments as provided; it does not add or infer events beyond those described.