FX.co ★ UK Natural Gas Futures Fall from 10-Month High

UK natural gas futures experienced a decline of over 11%, dropping to under 84 pence per therm. This follows a ten-month high of 103.7 pence reached on January 21. The decline is attributed to alleviated concerns surrounding LNG supply. Furthermore, short-term weather forecasts in the US have become milder, which has subsequently reduced heating demand. This change has allowed for an increase in gas flows to LNG export plants, thereby enhancing prospects for deliveries to both Europe and the UK. The UK market is particularly sensitive due to its limited storage capacity and significant reliance on imports, rendering it susceptible to both regional and global supply pressures. Additionally, geopolitical risk premiums have diminished following US President Donald Trump's announcement that Washington is in discussions with Iran, alleviating fears of disruptions in shipping through the Strait of Hormuz. Despite these changes, the underlying vulnerabilities persist, with EU gas storage facilities at only 41.1% capacity and UK storage at approximately 36.9%.