European natural gas benchmarks moved lower on Thursday, tracking a broader retreat in oil prices as market participants assessed a series of developments originating in the Middle East.
At 08:50 ET (12:50 GMT), the Dutch front-month benchmark at the TTF hub had slipped 1% to 48.375 euros per megawatt hour. British natural gas futures were also down 1.0%, trading at 116.78 pence per therm.
Among the geopolitical items on traders' radars was a renewed, if precarious, ceasefire between Israel and Lebanon. The accord was reached after a fourth round of U.S.-mediated talks and was described in a joint statement as being "contingent on a complete cessation of Hezbollah fire and the evacuation of all Hezbollah operatives" from areas south of the Litani River in southern Lebanon.
The statement added: "These steps will enable progress towards a comprehensive peace and security agreement." The talks did not directly include Hezbollah.
Market attention to the truce is linked to its potential bearing on broader negotiations between the United States and Iran. Officials in Washington and Tehran have been engaged in indirect discussions, and recent comments from both sides have been interpreted by some market participants as signs that diplomacy could proceed. U.S. President Donald Trump suggested progress in talks with Iran could occur as soon as this weekend, while Iran's foreign minister said contact with Washington has not been cut off. Earlier media reports had indicated Tehran had stopped relaying messages to the U.S. through intermediaries.
Separately, reporting attributed to the Wall Street Journal said President Trump has told aides he would not resume attacks on Iran unless U.S. forces were killed. At the same time, the White House appears to be confronting rising domestic pressure to end the conflict. The House of Representatives voted in favor of a resolution that would block the president from continuing the conflict, though the measure still requires Senate approval and would need two-thirds majorities in both chambers to override a presidential veto.
On the oil front, Brent crude futures - the global benchmark - were last down 3.1% at $94.76 a barrel, while U.S. West Texas Intermediate futures fell 3.4% to $92.78 a barrel. The slide in crude helped ease some of the near-term risk premium in broader energy markets and contributed to the downward pressure on gas benchmarks.
Supply and demand signals inside Europe also supported the softer gas prices. Reuters reported that gas-for-power demand is expected to rise by about 240 gigawatt hours per day as wind power generation eases from previously strong levels. That increase in gas-fired power needs competes with the downward pressure from the crude sell-off and the modest easing of geopolitical risk tied to the Israel-Lebanon truce.
Storage metrics also featured in market assessments. Citing Gas Infrastructure Europe data, the news agency reported EU gas storage sites were last 41.03% full, versus 49.22% this time last year.
The combination of diplomatic developments, lower oil prices and the interplay of power-sector demand and storage levels framed Thursday's trading in European gas markets. Traders will likely continue to monitor both the implementation of the ceasefire measures in southern Lebanon and developments in Washington-Tehran contacts, as well as short-term moves in oil and renewable generation that affect gas demand for power.