Europe Gas Steadies as Traders Assess Asia Demand, Trump Tariffs

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(Bloomberg) — European natural gas paused its rally, with traders watching key buyers in Asia where extreme heat is boosting demand for cooling, and US President Donald Trump’s rhetoric over Russia. 

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Benchmark futures settled marginally lower after five days of gains. Liquefied natural gas purchases increased in parts of North Asia amid hot weather, with a fuel shipment diverting away from Europe recently. That means the continent would need to pay more to keep supply coming and stockpile enough fuel ahead of winter. 

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At the same time, Trump threatened 100% “secondary tariffs” on Russia unless it agrees to a ceasefire within 50 days. He has signaled his growing impatience with President Vladimir Putin’s escalating military campaign against Ukraine. 

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Previously, Trump had threatened US trading partners including China and India with 500% tariffs on their products if they make any purchases of Russian oil, gas or other products under sanctions.

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“News about tightening sanctions on Russian energy could briefly support gas prices in Europe, although the likelihood of enforcement seems low” given Trump’s changing tune on tariff rates, said Florence Schmit, a strategist at Rabobank in London. “Ultimately markets will be supported by fundamentals — namely the stronger demand in Asia.”

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With underground storage sites around 63% full, Europe’s inventories are still at the low end for the time of year, while hot weather is boosting air conditioning needs in many parts of the region. 

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Some weather models have changed to show European temperatures converging with historic norms later this month, potentially capping demand. European buyers compete with other nations for global LNG shipments.

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Overall, Europe is still expected to accumulate sufficient gas inventories by the end of the summer, reaching levels of about 80%, Goldman Sachs Group Inc. analysts Samantha Dart and Frederik Witzemann said in a note. 

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“We estimate the region will still be able to attract enough LNG,” they wrote. However, “increased Asia competition for LNG might moderate European inflows.”

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Dutch front-month futures, Europe’s gas benchmark, settled at €35.45 a megawatt-hour in Amsterdam. 

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