TTF slightly declined to 41.7 euros; Strait passage eases gas shortage, but inventory concerns remain

⑴ The European benchmark Dutch TTF front-month contract edged down by €0.14 on Tuesday, closing at €41.70 per megawatt-hour. The UK front-month contract also fell by 0.25 pence to 99.69 pence/therm. Gas prices have come under pressure for the second consecutive trading day, reflecting a fading short-term supply-side risk premium. ⑵ The direct driver behind the easing supply pressure is the marginal improvement in transit conditions at the Strait of Hormuz: two stranded supertankers passed through the strait on Tuesday, and in recent weeks, seven empty LNG carriers related to Qatar have entered these waters. Institutions indicated that if the strait remains smoothly navigable and logistical bottlenecks are resolved, a gradual recovery in exports is likely to push initial price movements downward. ⑶ The Qatari energy minister made it clear that the BaZhan gas facility explosion will not affect LNG exports. In addition, US Vice President Vance stated that the Swiss talks have laid a solid foundation for a final peace agreement. Multiple negative geopolitical developments are compounding, further dampening market anxiety over potential supply disruptions. ⑷ However, data from European natural gas infrastructure shows that current gas storage fill rates stand at only 46.72%, much lower than last year’s 55.81% for the same period. Institutions warn that reopening the strait cannot fully resolve the fundamental issue of low supply and inventories ahead of winter. North-Western European temperatures are expected to peak at 28.7°C on June 27, and then decline. Residential heating demand remains broadly steady, while demand for power generation is also lacking upward momentum thanks to stable wind and solar forecasts. The benchmark contract in the European carbon market simultaneously dropped by €0.48 to €81.09 per ton.