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EMEA Natural Gas Update: Futures Rally Over 3% as Middle East Conflict Intensifies

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European natural gas futures edged higher on Thursday as the conflict in the Middle East escalated further, adding to concerns over gas supplies from the region.

Front-month Dutch TTF futures rose 3.24% to 81.815 euros ($94.97) per megawatt-hour, while British NBP futures gained 3.45% to 204.480 British pence ($2.76) per therm.

On Wednesday, Iran said that it had struck 10 vessels along the Strait of Hormuz, in response to US attacks against five Iranian oil tankers, marking the biggest wave of attacks since the conflict began over six months ago, according to media reports.

Meanwhile, US President Donald Trump said that he believed the war would end "immediately" after the country's midterm elections in November.

"I think the war will end immediately after the election" because Iran "can't hold out any longer," he said, while talking to reporters outside Air Force One on Wednesday.

Traffic through the Strait of Hormuz held steady, with 21 transits recorded on Wednesday, according to data from ShipFinder.

Daniel Hynes, a senior commodity strategist at ANZ, noted that European supply constraints continued to mount amid Ukrainian drone attacks targeting Russia's Yamal LNG facilities, which cover 5% of the region's gas needs.

Lower than usual European gas inventories remain a concern at just 67.33% of capacity, compared to 79.73% a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year average for this period at 83.7%, according to the Swiss Federal Office of Energy.

Severe thunderstorms and torrential rainfall are sweeping northern Italy and the Adriatic as a deep trough moves across Europe.

This is set to bring an end to the warm pattern that prevailed across the region in recent months, with the strongest storms forecast across northeast Italy, Slovenia and Croatia through Friday, according to Severe-Weather EU.

This is also expected to ease cooling demand in the near-term, reduce pressure on gas inventories as the bloc focuses on refilling.

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