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(Bloomberg) — European natural gas prices are headed for their biggest weekly retreat in almost two years after supply fears linked to tensions in the Middle East eased.
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Benchmark futures fell as much as 3.1% on Friday, marking the sixth consecutive daily decline. That’s set them on course to wipe out around a fifth of their value this week, the biggest weekly loss since July 2023.
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Prices staged a dramatic slide this week after a sudden ceasefire was forged between Iran and Israel with the help of US President Donald Trump. That removed the threat of the Strait of Hormuz being disrupted, which accounts for a fifth of global liquefied natural gas trade.
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The escalation of the brief conflict led to energy price gains in the prior two weeks. A disruption along the strait could have jeopardized Europe’s LNG deliveries from Qatar, which account for about 10% of its imports.
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“Transit issues via any of the world’s main chokepoints usually lead to increased costs, longer journey times and disruptions to global trade,” the Institute for Energy Economics and Financial Analysis said in a note Friday. “Once again, this situation has shown the fragility of the oil and gas market.”
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Continuously low demand for LNG imports from China is also helping cool the market, with more fuel arriving in Europe than usual for this time of the year. China’s LNG demand has been affected by a weaker economy strained by higher US tariffs, though Commerce Secretary Howard Lutnick said the US has finalized a trade deal with China that will see countermeasures reduced.
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Dutch front-month futures, Europe’s gas benchmark, fell 2.9% to €33.05 a megawatt-hour by 9:31 a.m. in Amsterdam. Consultancy firm Energy Aspects Ltd. forecasts prices for the rest of the year at €38.30 per megawatt-hour, based on expectations that European storage sites will probably just about reach their legal filling targets.
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