European natural gas futures witnessed a sharp rally on Friday, after Israel continued its strikes against Lebanon, just hours after the interim peace deal between the US and Iran.
The Dutch TTF front-month contract was up 3.60% to 41.980 euros ($48.09) per megawatt hour, while the UK NBP front-month contract was up 3.65% to 100.220 British pence ($1.32) per therm.
Despite calls for a ceasefire under the memorandum signed by the US and Iran on Thursday, Israeli military operations in Lebanon continued.
Lebanon's National News Agency reported that a series of airstrikes and artillery attacks killed at least 16 people and injured several others, underscoring the fragile security situation despite broader efforts to de-escalate tensions across the region.
Meanwhile, the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, began returning to normal traffic, while still being heavily constrained for the 16th week running, with nearly 17 vessels transiting through it over the past 24 hours, according to the Hormuz Strait Monitor.
Daniel Hynes, a senior commodity strategist at ANZ, noted that Qatar has brought an empty LNG tanker back into the Persian Gulf, through the conflict-ridden Strait for the first time since the crisis began in late February.
Hynes said that this reopening stands to help Europe and "Germany in particular," as the region scrambles to replenish depleted gas inventories ahead of the next winter heating season. He said the region was facing heightened competition from Asia, as warmer temperatures pushed demand higher.
European gas inventories currently stand at 45.56% of capacity, compared to 54.38% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.
Inventories were also significantly below the five-year average for this period, at 59.9%, according to the Swiss Federal Office of Energy.