European natural gas futures rebounded to €34/MWh, up from an eight-week low of €33, as traders assessed shifting weather and supply dynamics. While the recent European heatwave is expected to ease, reducing cooling demand, higher wind power output in northwest Europe could further curb gas use by power plants. Supply remains stable, with consistent Norwegian exports and LNG send-outs.
On the policy front, the European Commission is set to propose a legally binding 2040 climate target to cut net emissions by 90% from 1990 levels, with some flexibility for industry. Last week, gas prices dropped about 18% after a ceasefire between Iran and Israel eased fears of disruptions through the Strait of Hormuz. Additionally, sluggish LNG demand from China, due to its slowing economy and increased US tariffs, has diverted more gas to Europe, increasing supply and weighing on prices.
