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EMEA Natural Gas Update: Futures Rally After US Continues Attacks; Iran Issues Latest Warning

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European natural gas futures were up on Thursday, hovering near their three-month high, amid relentless US attacks against Iran, and the latter's latest threats against regional infrastructure.

The front-month Dutch TTF contract rose 1.60% to 55.220 euros ($63.27) per megawatt-hour. The front-month UK NBP contract was up 1.60% to 132.970 British pence ($1.79) per therm.

The US Central Command said in a post on X on Wednesday that it had continued strikes against Iranian military targets, hitting "command centers, air defense sites, missile and drone capabilities, and coastal surveillance facilities," to deprive Tehran's ability to target commercial vessels transiting the Strait of Hormuz.

Meanwhile, Iran has warned that all infrastructure in the region "will be crushed under steel blows," if Washington continues with its offensive, according to a report by Al Jazeera.

Despite the raging conflict, commercial traffic along the strategically crucial Strait, which accounted for one-fifth of global LNG flows, remained elevated, with 18 transits on Wednesday, according to ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, warned that this fresh escalation in the conflict will hamper Europe's ability to refill its gas inventories ahead of winter, as the region competes with Asian buyers for limited LNG cargoes.

Hynes noted that Europe's LNG imports had dropped 10% in March, due to stronger renewables output, higher pipeline flows and lower exports from Ukraine, which is hindering the region's efforts to fill 90% of gas capacity by the start of the next heating season.

European gas inventories stood at 52.77% of capacity, compared to 63.32% 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 68%, according to the Swiss Federal Office of Energy.

At the same time, large parts of Europe continued to simmer, after having experienced the hottest Summer temperatures on record in June, according to the World Meteorological Organization, which has resulted in higher space cooling demand, and gas-fired power burn.

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