According to the Zhitong Financial APP, as concerns about recent supply eased, the price of henry hub natural gas in Europe has been hovering near the oversold zone after three consecutive days of decline. European natural gas benchmark futures fluctuated on Thursday, with a decline of more than 10% earlier this week, hitting a one-month low. The relative strength index fell below 36 in the early morning, the lowest level since July.

Under normal circumstances, when this index reaches 30 or below, it indicates that the market momentum may reverse, as selling may have been overdone. However, European natural gas has been in oversold territory for several consecutive days before.

European natural gas futures are approaching oversold territory.

Before the market sentiment shifted, the price of henry hub natural gas in Europe rose to its highest level in 2024 last month, due to concerns about escalating conflict between Russia and Ukraine, as well as extensive maintenance by Norway, the largest supplier, potentially restraining natural gas supply. However, Russia's fuel shipments are still increasing, and ample European inventories and weak demand indicate sufficient market supply at present.

The volume of liquefied natural gas imports in Europe is increasing, and European gas storage has reached 93% before the arrival of winter. Traders relying on trend-tracking algorithms have started reducing their bets on higher prices for European natural gas, further indicating waning concerns about supply risks.

Nevertheless, the market is still closely watching for signs of tightening winter supply, which could lead to another surge in prices. Analysts at SEB AB stated this week that global natural gas supply remains limited.

SEB's Bjarne Schieldrop and Ole Rodahl Hvalbye stated, "Despite high EU inventories, our price forecast indicates that prices will remain at high levels from 2024 to 2025, and will start to decline by the end of 2026 and in 2027 as new liquefied natural gas capacity comes online."

At the time of writing, the Dutch near-month natural gas futures, considered as the European benchmark, fell 0.4% to 35.66 euros per megawatt-hour.