(Bloomberg) -- European natural gas prices slumped, following a selloff in oil and broader financial markets amid mounting economic concerns.
Benchmark futures slid 3.1% after surging 13% last week. Global stocks plunged Monday on signs that the US economy is on the verge of deteriorating quickly, with the rout also pushing oil contracts lower.
At the same time, traders are watching for a potential retaliatory strike on Israel by Iran and regional militias, which risks disrupting gas supplies to and from the region.
While developments in the Middle East are contributing to a geopolitical risk premium, “that is now suffering a bit as crude oil tanks on demand concerns,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.
Gas is “basically giving back most of the late Friday spike, part of that being driven by the fact we had no attack over the weekend, although an imminent strike on Israel is still feared,” he said.
Meanwhile in Russia — Europe’s second-biggest supplier of liquefied natural gas — signs are emerging that its Arctic LNG-2 project sanctioned by the US is starting to load fuel. A large vessel docked at the plant last week, according to satellite images, while the ship’s transponder points to its location elsewhere, a common feature of dark-fleet ships.
Dutch front-month futures, Europe’s gas benchmark, settled at €35.50 a megawatt-hour. Benchmark European carbon futures for December fell as much as 3.9% on ICE Endex, the biggest drop since May 13.
©2024 Bloomberg L.P.
