European gas prices remain stable at high levels as the market focuses on Middle Eastern diplomacy

(1) On Tuesday morning, the near-month contract of the Dutch TTF slightly retreated to around 96 euros per megawatt-hour, while the UK near-month contract dropped to about 237 pence per therm. Both remain near their highest levels since December 2022. (2) There has been a new diplomatic push in the Middle East, with officials from Saudi Arabia, Turkey, and Pakistan meeting with Iran in Tehran. The Russian President is also set to meet with leaders from Iran and Qatar. Market expectations of easing tensions have put slight pressure on prices. (3) However, disruptions to Middle Eastern liquefied natural gas supplies persist. Partial vessel deliveries by QatarEnergy to Italy's Edison are not expected to resume until the end of December, making it difficult for geopolitical risk premiums to dissipate significantly. (4) Multiple processing plants and oil and gas fields in Norway have been shut down, with Tuesday's export nominations at around 324 million cubic meters per day. This tightening of supply is providing support to prices. (5) Weather forecasts show below-average temperatures this weekend and the week after, accompanied by overnight frosts. A drop in wind speeds could further boost demand for gas in power generation. Although European gas storage has seen a slight injection, overall levels remain historically low for the period. (6) In the short term, gas prices may continue to fluctuate at elevated levels. Developments in the Middle East, the progress of resuming production in Norway, and the pace of temperature declines are key points to watch going forward.