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EMEA Natural Gas Update: Futures Hit Highest Level Since December 2022

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European natural gas futures rose in after-hours trading on Wednesday to their highest level since December 2022, more than doubling since the start of the US-Israel-Iran conflict in late February, as concerns over supply mount ahead of winter.

Front-month Dutch TTF futures rose 4.099% to 78.950 euros ($91.82) per megawatt-hour, while British NBP futures gained 4.253% to 196.830 British pence ($2.67) per therm.

Gas prices rose alongside crude oil as tensions in the Middle East escalated. Tehran said it had attacked 10 ships in the Persian Gulf after the US sank five Iranian tankers, news outlets said. The escalating strikes pushed oil prices above $100 a barrel for the first time since July.

European gas supplies remained tight, and concerns grew over the region's ability to replenish inventories before the winter heating season. In earlier trade, Dutch and UK futures prices spiked above 80 euros/MWh and 200 British GBP/t respectively on Middle East headlines.

A more hopeful sign appeared earlier in the week when Qatari authorities reportedly confirmed the successful transit of the first LNG tanker through the strait since late July. Multiple news outlets reported that the vessel, the Al Marrouna, had passed through the waterway en route to Port Qasim in Pakistan.

However, ANZ analyst Daniel Hynes said Europe's supply situation could tighten further as disruptions to Norwegian and Algerian flows continue while major facilities undergo maintenance, potentially limiting the region's ability to refill storage before winter.

Norway is expected to reduce its natural gas export capacity by about 20% during the final phase of scheduled maintenance, with work continuing through the end of September. The maintenance is intended to prepare fields and processing facilities for peak winter demand, Inspenet said.

Meanwhile, European gas inventories remained below historical averages, standing at 67.12%, compared with 79.48% during the same period a year earlier, according to Gas Infrastructure Europe. Inventories were also well below the five-year average of 83.5% for this time of year, according to the Swiss Federal Office of Energy.

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