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EMEA Natural Gas Update: Futures Rise Following Latest Middle East Flareup

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European natural gas futures were up on Monday, following the latest flare-up in the Middle East, which once again reignited supply fears.

Front-month Dutch TTF futures were up 2.79%, at 41.920 euros ($47.77) per megawatt-hour, while UK natural gas was up 2.51%, at 100.250 British pence ($1.32) per therm.

This comes amid the latest round of strikes traded between the US and Iran, with the Islamic Revolutionary Guard Corps claiming to have struck eight US military facilities in Kuwait and Bahrain, in retaliation against US strikes against Iran late last week, according to a report by Al Jazeera.

Things have since calmed, with both sides agreeing to pause attacks ahead of the next round of talks, which are set to be held in Doha on Tuesday, according to Axios, citing an unnamed senior US official.

Meanwhile, the strategically crucial Strait of Hormuz, which accounted for one-fifth of global LNG flows, saw traffic dip yet again, following fresh attacks against commercial vessels. Just five vessels transited the Strait over the past 24 hours, according to the Hormuz Strait Monitor.

According to Daniel Hynes, a senior commodity strategist at ANZ, empty LNG tankers have continued to line up near Qatar's export plants, but their passage through the Persian Gulf, he said, would depend "on securing safe passage through the strait."

This comes at a time when European natural gas inventories remained depleted, at 48.29% of capacity, compared to 57.77% 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 62.9%, according to the Swiss Federal Office of Energy.

To make matters worse, Europe is currently facing a record heatwave, with countries such as the UK, France, Switzerland and Germany hitting new "all-time high temperature records," with the mercury surging past 40 degrees Celcius, according to Severe-Weather EU, leading to higher space cooling demand, and thus, increased power consumption.

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