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EMEA Natural Gas Update: Futures Edge Higher After Iran Rejects US-Backed Ceasefire Proposal

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European natural gas futures edged higher on Friday as the military conflict between the US and Iran intensified after Tehran rejected another ceasefire proposal.

The front-month Dutch TTF gas contract rose 0.41% to 62.150 euros ($70.77) per megawatt-hour, while the front-month UK NBP contract was up 0.53% to trade at 150.240 British pence ($2.00) per therm.

On Friday, in a post on X, the US Central Command said that it had completed another round of strikes against Iran, for the 13th consecutive day, targeting the country's military installations to diminish Tehran's ability to target commercial vessels along the Strait of Hormuz.

This followed Iran's rejection of the latest US-backed ceasefire proposal, the terms of which remain unclear. Tehran cited uncertainty over its control of the strategically crucial Strait, according to the New York Times, citing Iranian and Iraqi officials.

Meanwhile, traffic along the strait, which accounted for one-fifth of global LNG flows, stood at 12 on Thursday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, noted that while supply constraints had led to the surge in gas prices, they were now in "overbought territory" based on technical indicators, hinting at a potential pullback.

He, however, continued to caution about the low gas inventory levels across Europe, ahead of the fast-approaching winter heating season.

European gas inventories remain depleted at just 54.61% of capacity, compared to 65.65% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period, at 70.3%, according to data from the Swiss Federal Office of Energy.

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