European natural gas prices fluctuated as traders remained fixated on near-term geopolitical risks in the Middle East which threaten to disrupt energy markets.
Benchmark Dutch futures held near €40 a megawatt-hour on Tuesday following a 2% gain the previous day. Contracts for delivery in November have widened their premium over the 2025 equivalent in recent weeks, signaling that escalating tensions between Israel and Iran have gripped the market’s focus.
The spread “suggests that geopolitical risk is priced into short-term gas prices,” Oslo-based analysis firm Veyt said in a note this week. It also shows that the market is more bearish about 2025, leaving room to the downside, they said.
European gas prices have been stubbornly high since the start of the month compared to historic averages — even though demand for the fuel remains tepid. The continent has continued to build up already hefty fuel stockpiles in recent weeks, despite the start of the heating season.
A key risk is that a broader conflict in the Middle East might disrupt shipments through the Strait of Hormuz, an important waterway for liquefied natural gas and oil shipments. Traders are still waiting to see how Israel will retaliate against Iran for a recent missile barrage.
Europe’s winter could also be colder than last year, according to some forecasters, as a weakened La Niña finally arrives. That would raise demand for the fuel used in heating.
Dutch front-month futures, Europe’s gas benchmark, traded little changed at €39.90 a megawatt-hour by 8:49 a.m. in Amsterdam. November 2025 contracts closed at €39.17 on Monday.
The spread dynamic is also playing out in the options market, with contracts for this November more costly to insure than those for next winter.
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