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EMEA Natural Gas Update: Futures Gain on Short Supplies

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European natural gas futures edged higher in after-hours trading Friday and was on track for a fourth consecutive weekly gain, as conflicts in the Middle East continued to cloud the outlook for LNG shipments through the strategically important Strait of Hormuz.

Front-month Dutch TTF futures rose 0.627% to 72.26 euros ($83.97) per megawatt-hour, while UK NBP futures gained 0.848% to 179.500 British pence ($2.43) per therm.

The Dutch benchmark was headed for a weekly gain of about 7%, according to OilPrice.com, as renewed conflict in the Middle East diminished expectations that LNG shipments through the Strait of Hormuz will normalize in the near term. The benchmark has climbed more than 75% over the past two months, the Financial Times reported Thursday.

Uncertainty over the conflict's duration has added to concerns about the region's energy security. US Vice President JD Vance said Thursday that he could not provide a timeline for ending the conflict with Iran and that all options remained on the table. Iran's First Vice President Mohammad Reza Aref, meanwhile, warned that Tehran's response to US attacks would be "asymmetrical" and "multi-layered."

The market is also entering the winter season with relatively low gas inventories, leaving Europe with a smaller buffer against colder weather or further supply disruptions.

Storage sites across Europe were 65.85% full, compared with 78.29% during the same period last year, according to Gas Infrastructure Europe. Inventories were also below the five-year average of 82.5% for this point in the year, according to the Swiss Federal Office of Energy. Germany and the Netherlands have also said they expect to miss their respective national storage targets.

European officials have sought to reassure markets that the region's supply remains secure for now. The European Union's Gas Coordination Group said Thursday there was "no immediate risk" to the bloc's gas supply security, while describing market conditions as "exceptional" and calling for close monitoring.

Norway's Equinor said Wednesday that its first LNG cargo under long-term agreements with Cheniere Energy, the largest US LNG producer, was en route to Europe.

The cargo was loaded at Cheniere's Sabine Pass LNG export facility in Louisiana. Under the agreements, future cargoes will be directed to customers in Europe and elsewhere depending on market demand.

Equinor is to purchase 3.5 million metric tons of LNG annually from Cheniere's Gulf Coast facilities for 15 years under the agreements.

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