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EMEA Natural Gas Update: Futures Rally Amid Escalating US-Iran Conflict, Low Storage Inventories

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European natural gas futures rose sharply on Wednesday, as the conflict between the US and Iran escalated, while regional inventories languish below seasonal averages.

The front-month Dutch TTF contract rose 2.97% to 61.435 euros ($70.07) per megawatt-hour, while the front-month UK NBP contract climbed 2.63% to 149.210 British pence ($1.99) per therm.

On Wednesday, in a post on X, US Central Command said that it had completed the 11th consecutive day of strikes against Iran, targeting the country's military infrastructure, to diminish Tehran's ability to target commercial vessels along the Strait of Hormuz.

In retaliation, Tehran launched more strikes against US bases and military installations located across Bahrain, Kuwait and Jordan, according to a report by Al Jazeera.

Meanwhile, traffic along the strategically crucial strait, which accounted for one-fifth of global LNG flows, held steady at 16 transits on Tuesday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, said Europe's supply outlook was becoming increasingly precarious as hotter weather across Asia revived Chinese demand, intensifying competition for cargoes and making it more difficult for EU countries to refill gas reserves ahead of winter.

European gas inventories stood at 54.20% of capacity, compared to 65.08% during the corresponding period a year ago, according to data from Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for the period, at 69.7%, according to the Swiss Federal Office of Energy.

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Oil & Energy

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