European natural gas prices rose toward €45 per MWh on Tuesday, retracing part of the previous session’s decline amid forecasts of a summer heatwave in the region.
Weather models indicate that another spell of extreme heat is set to hit Northwest Europe, which is expected to significantly boost air-conditioning use and power demand.
The increase in demand comes as the region’s gas inventories remain relatively low, with storage facilities currently around 49% full, well below the nearly 60% level recorded at the same time last year.
This has heightened concerns over whether Europe will be able to rebuild sufficient reserves ahead of winter.
Moreover, market participants noted that LNG inflows into Europe have not yet risen enough to ease regional supply constraints, even as shipping activity through the Strait of Hormuz surged following progress in US-Iran peace talks.