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EMEA Natural Gas Update: Futures Rise as Heatwave and Hormuz Risks Tighten Market

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European natural gas futures climbed in late trading on Friday, supported by a surge in cooling demand from a severe heatwave across Europe, tighter power system conditions, and lingering geopolitical risks tied to the Middle East.

Front-month Dutch TTF gas futures rose 1.596% to 41.05 euros ($46.74) per megawatt-hour. UK natural gas gained 1.741% to 98.20 British pence ($1.30) per therm.

Temperatures across France, Spain, and the UK hit record June highs this week, sharply increasing electricity demand for air conditioning and straining already-tight power grids.

In France, EDF reduced nuclear generation after elevated river temperatures limited the availability of cooling water, according to the Financial Times. In the UK, grid operators curtailed output at five major gas-fired power stations as temperatures reached 36 degrees Celsius (96.8 degrees Fahrenheit), with overheating risks and reduced operational efficiency forcing cutbacks.

The combination of higher demand and lower available generation has pushed wholesale electricity prices higher across the region.

At the same time, gas storage levels remain below historical norms at a critical point in the seasonal cycle. Data from Gas Infrastructure Europe shows EU storage at 47.43% of capacity, compared with 56.91% a year earlier and well below the five-year average of 62%, according to the Swiss Federal Office of Energy.

On the supply side, markets remain sensitive to tensions in and around the Strait of Hormuz, a key route for global oil and LNG flows. A container ship was attacked in the Gulf on Thursday, while three oil tankers reportedly turned back on Friday after warnings from Iran's Islamic Revolutionary Guard Corps for allegedly entering restricted waters, according to Al Jazeera, citing Iranian state media IRIB.

Despite the incidents, HormuzStraitMonitor.com reported 78 vessel transits through the corridor over the past 24 hours, with around 280 ships waiting.

Bloomberg reported that empty LNG carriers have been queuing outside Qatar's major export facilities to load cargoes, though any sustained increase in shipments is dependent on safe passage through the Strait, which has come under renewed scrutiny following Thursday's attack.

Weather conditions are expected to moderate over the weekend, but forecasters warn the relief may be temporary. Severe-weather.eu said in a Friday update that a strengthening El Nino pattern in the Pacific could drive above-average temperatures across Europe again later in the summer and into autumn.

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