European natural gas futures have experienced a decline of over 8%, falling to €36.3 per megawatt-hour (MWh), approaching their lowest point since September 2024. This downturn is largely attributed to concerns that the ongoing global trade conflict could dampen industrial activity, subsequently decreasing demand for gas. The situation intensified when China declared a 34% tariff on all US imports, mirroring the tariffs imposed by the US, which has raised alarms about potential inflation and a slowdown in economic growth. Such developments could prompt energy-intensive industries to reduce operations, thereby diminishing future energy requirements.
Furthermore, the recent increase in oil production from May and possible adjustments to European storage targets may further boost gas supply. The market is also expecting an uptick in liquefied natural gas (LNG) shipments to Europe, driven by diminished demand in China; this trend, combined with weak LNG consumption projected in Asia for 2025, could potentially sustain lower gas prices in Europe.
