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EMEA Natural Gas Update: Futures Hit Four-Month High as Conflict Fuels Supply Concerns

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European natural gas futures pared earlier gains in after-hours trading Tuesday after hitting a four-month high, as ongoing US strikes against Iran and Tehran's retaliatory attacks on neighboring countries heightened concerns over global energy supply risks.

The front-month Dutch TTF contract rose 1.35% to 59.535 euros ($67.92) per megawatt-hour, while the front-month UK NBP contract climbed 2.008% to 144.300 British pence ($1.93) per therm.

The European benchmark briefly touched 60 euros/MWh, according to Daniel Hynes, as traders assessed the risk of tighter LNG availability amid renewed disruption fears in the Middle East.

As reported by, Tehran said it had received a proposal from mediators for a 10-day ceasefire aimed at reviving an interim agreement reached last month. The developments came as the US carried out a 10th consecutive day of strikes against Iran, while Tehran continued retaliatory attacks against neighboring countries.

"Tanker traffic has collapsed again, with both inbound and outbound movements drying up as security concerns intensify," Daniel Hynes, analyst at ANZ, said of the Strait of Hormuz.

The conflict risks making it increasingly difficult for Europe to rebuild gas inventories ahead of winter. European storage levels stood at 54% of capacity, compared with 64.7% during the same period a year earlier, according to Gas Infrastructure Europe. Inventories were also below the five-year average of 69.5% for this time of year, according to the Swiss Federal Office of Energy.

Hynes said European buyers are competing with Asian importers for available LNG cargoes as supply tightens. China's LNG imports rose 8.3% year over year in June to 5.68 million tonnes, marking a second consecutive monthly increase, according to customs data. Smaller buyers, including Pakistan and Bangladesh, have also increased purchases in the spot market, adding to competition for available supply, Hynes said.

The tighter market comes as heatwaves across Europe continue to disrupt energy operations while increasing cooling demand. High Mediterranean Sea temperatures are restricting cooling operations at EDF's 930 MW Martigues gas plant, adding pressure to France's power system as several nuclear plants reduce output, Inspenet reported Monday.

EDF secured an exception allowing the facility to operate with cooling water above the usual 30-degree Celsius limit, but sea temperatures have approached the revised 32-degree Celsius threshold, the report said.

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