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EMEA Natural Gas Update: Futures Pull Back From Earlier Highs in Late Trade

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European natural gas futures pulled back from earlier highs in after-hours trading on Wednesday but remained sharply higher as fresh violence between the US and Iran heightened concerns over energy supplies and traffic through the Strait of Hormuz.

Front-month Dutch TTF futures rose 1.782% to 73.505 euros ($85.19) per megawatt hour, while UK NBP futures climbed 2.047% to 181.940 British pence ($2.46) per therm.

Earlier, European gas prices surged above 75 euros/MWh, surpassing their highest intraday level since January 2023, before retreating to current levels. UK gas prices similarly jumped as high as 185 British pence per therm.

The gains came after the US launched a new wave of attacks on southern Iran early Wednesday, prompting retaliatory Iranian strikes on US bases in Bahrain, Jordan and Iraq, amid an intensifying standoff over the Strait of Hormuz, Al Jazeera reported. The attacks marked the heaviest exchange of fire between the US and Iran in more than a month. Kuwait also said its air defenses confronted Iranian drones and missiles.

Trading Economics said Iran's Islamic Revolutionary Guard Corps warned that the US strikes would further restrict traffic through the Strait of Hormuz, a key energy route through which roughly a fifth of global LNG typically passes.

Meanwhile, German and Nordic power fourth-quarter price spreads widened to a record high Wednesday as soaring gas prices drove up the premium in the German market, Montel reported. Additionally, it said Germany's 500-megawatt Unit B at the 1.5-gigawatt Jaenschwalde lignite plant was shut down for several hours Tuesday after homemade explosive devices were found near an electrical substation southeast of Berlin.

Higher gas prices are also hampering Europe's efforts to replenish inventories ahead of winter.

EU gas inventories stood at 65.39% of capacity on Wednesday, down from 77.65% in the same period a year earlier, according to Gas Infrastructure Europe. Inventories were also significantly below the five-year average for this point in the year, which stood at 82.1%, according to the Swiss Federal Office of Energy.

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