European natural gas futures were up on Tuesday, ahead of the US-Iran peace talks that are set to be held in Doha on Tuesday, following renewed hostilities between the two sides over the weekend.
The front-month Dutch TTF contract was up 2.44% to 43.655 euros ($49.70) per megawatt-hour, while the UK NBP front-month was up 2.38% to 105 British pence ($1.39) per therm.
Markets have retraced the previous session's gains after both sides paused hostilities ahead of the next round of diplomatic talks in the capital city of Qatar.
Meanwhile, the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, remained effectively shut for the 17th week running, with just five vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.
Qatar's Ministry of Transport announced a temporary suspension of all maritime movements in response to recent hostilities, as a precautionary measure, according to a report by The Peninsula Qatar. This comes just days after the country began ramping up its output and exports, following progress in the US-Iran peace talks.
Daniel Hynes, a senior commodity strategist at ANZ, warned that European LNG markets were poised to see tighter fundamentals over the next couple of months, as "China re-enters the market."
To make matters worse, the region is operating with a thin inventory buffer, at just 48.62% of capacity, compared to 58.18% during the corresponding period a year ago, according to Gas Infrastructure Europe.
Inventories were also significantly below the five-year average for this period, at 63.2%, according to the Swiss Federal Office of Energy.