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EMEA Natural Gas Update: Futures Rally Over 2% as Tensions Cloud US-Iran Peace Talks

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European natural gas futures rallied on Wednesday as tensions intensified in the Middle East, casting a cloud over peace negotiations between the US and Iran.

The Dutch TTF front-month contract rose 2.27% to 48.690 euros ($56.50) per megawatt-hour, while the UK NBP front-month contract rose 2.45% to 117.60 British pence ($1.58) per therm.

On Wednesday, US Centcom said on X that it had intercepted "multiple Iranian ballistic missiles and drones," aimed at Iran's neighbors. The US also conducted another round of self-defense strikes against Iran's Qeshm Island in retaliation over Iran reportedly firing missiles at Kuwait and Bahrain.

Iranian drones and missiles struck a terminal in Kuwait's international airport, killing one person and wounding several others, according to Al Jazeera, marking a major escalation in the conflict.

Iran's Revolutionary Guards warned that their barrage of strikes against neighbors "should serve as a lesson" for the US.

Meanwhile, the strategically crucial Strait of Hormuz remained effectively shut for the 14th week running, with just 4 vessels transiting over the past 24 hours, according to the Hormuz Strait Monitor.

Daniel Hynes, senior commodity strategist at ANZ, said this is set to put added pressure on European buyers, as they "struggle to refill storage facilities," as Asian imports rise.

Hynes warned that Asia's supply constraints could worsen with Australian workers at the Ichthys LNG facility commencing strikes after talks stalled between the union and the company.

European gas inventories stood at 40.76% of capacity, compared to 48.88% 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 54.7%, according to the Swiss Federal Office of Energy.

All of this comes during a heatwave across Europe, which has "obliterated historical temperature records," according to Severe-Weather EU, leading to increased air conditioning use and gas-fired power generation.

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