FX.co ★ European Natural Gas Sees Lower Volatility

European natural gas futures remained above €50/MWh on Friday, with volatility easing for a second straight session and the week ending slightly lower as markets evaluated how Europe and Asia will secure LNG supplies following the halt of exports from the Persian Gulf. Escalating attacks by Iran on GCC nations at the start of the week reduced expectations of a near-term de-escalation. The conflict forced QatarEnergy to suspend operations at its liquefied natural gas facilities, which account for about 20% of global LNG supply. At the same time, LNG shipments from the UAE stayed on hold as tankers avoided transiting the Strait of Hormuz, pushing European gas prices to trade roughly 60% higher since the beginning of the month. Even so, new data showed that US natural gas production climbed to a record high last year, while investment in LNG capacity continued to increase, shoring up alternative supply options for European countries that have relied more heavily on LNG imports since the EU curbed Russian gas purchases in 2022.