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EMEA Natural Gas Update: Futures End Week Up on Renewed Middle East Violence

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European natural gas futures trimmed earlier gains in late trading on Friday, after US President Donald Trump reportedly said he was considering intensifying military operations against Iran.

The front-month Dutch TTF contract was up 1.78% at 63.00 euros ($71.70) per megawatt-hour, while the front-month UK NBP contract rose 2.32% to 152.91 British pence ($2.04) per therm.

In earlier trade, prices climbed above 64 euros/MWh for the first time since January 2023, Trading Economics said.

The gains came as tensions in the Middle East continued to fuel fears of supply disruptions. Earlier this week, Iran reportedly rejected a US ceasefire proposal conveyed through Iraq. Axios reported on Thursday that Trump said he was weighing restarting major combat operations against Iran.

The US also carried out a 13th consecutive night of military strikes on Iran, while Trump warned Tehran and its Houthi allies in Yemen they would face "major military punishment" if attacks on vessels in the Red Sea continue.

The violence and rhetoric pushed European benchmark gas prices up more than 10% this week and more than 45% since the start of July as reduced LNG flows from the Persian Gulf intensified competition with Asian buyers for spot cargoes, Trading Economics also noted.

The surge in prices is complicating efforts by European buyers to rebuild gas stocks ahead of the winter heating season.

Gas storage across Europe was 54.61% full, compared with 65.65% at the same time last year, according to Gas Infrastructure Europe. Inventories also remained well below the five-year average of 70.3% for this point in the year.

The Institute for Energy Economics and Financial Analysis, citing Kpler data, said LNG imports into the EU and UK have fallen 32% year on year since the beginning of July. The US accounted for 61% of Europe's LNG imports during the period, followed by Russia with 17%.

Analysts said fewer cargoes have been diverted to Europe as higher prices encouraged Asian buyers to secure additional LNG supplies during a hot summer. North Asian LNG prices have climbed above $22 per million British thermal units, reflecting expectations that supply disruptions could persist.

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