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EMEA Natural Gas Update: Futures Edge Lower Amid Relentless US Strikes Against Iran

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European natural gas futures edged lower on Thursday while continuing to hover near their three-month high, amid relentless US attacks against Iran, leading to heightened fears of more supply constraints in the region.

The front-month Dutch TTF contract dropped 0.13% to 54.285 euros ($62.24) per megawatt-hour. The UK front-month NBP contract was down 0.14% to 130.710 British pence ($1.74) per therm.

On Wednesday evening, in a post on X, the US Central Command said that it had continued strikes against Iranian military targets, hitting "command centers, air defense sites, missile and drone capabilities, and coastal surveillance facilities," to deprive Tehran's ability to target commercial vessels transiting the Strait of Hormuz.

Despite the raging conflict, commercial traffic along the strategically crucial Strait, which accounted for one-fifth of global LNG flows, remained elevated, with 18 transits on Wednesday, according to ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, warned that this fresh escalation in the conflict will hamper Europe's ability to refill its gas inventories ahead of winter, as the region competes with Asian buyers for limited LNG cargoes.

Hynes noted that Europe's LNG imports had dropped 10% in March, due to stronger renewables output, higher pipeline flows and lower exports from Ukraine, which is hindering the region's efforts to fill 90% of gas capacity by the start of the next heating season.

European gas inventories stood at 52.77% of capacity, compared to 63.32% 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 68%, according to the Swiss Federal Office of Energy.

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