European natural gas futures pared some gains in after-hours trade on Wednesday as the ongoing Middle East conflict renewed concerns over LNG supply disruptions and Europe's ability to rebuild inventories before winter.
The front-month Dutch TTF contract rose 3.382% to 54.75 euros ($62.62) per megawatt-hour. The UK front-month NBP contract climbed 2.989% to 131.980 British pence ($1.78) per therm.
The Dutch contract earlier traded as high as 55 euros/MWh before pulling back in later trade.
Prices continued to rise on the back of ongoing military clashes in the Middle East between the US and Iran, which have alternately constrained and shut down ship traffic through the Strait of Hormuz since March.
LNG shipping through the Strait has halted since July 11, Kpler said in a note on Monday, noting that the last LNG carrier to transit the waterway was an Adnoc-operated vessel, which crossed after Iran's July 7 attacks on the QatarEnergy-operated Al Rekayyat tanker.
LNG traffic through Hormuz had recovered in June following a ceasefire and renewed US-Iran talks, with 40 transits recorded compared with eight in May and none in March, according to Kpler.
With reliable LNG from the Persian Gulf essentially cut off, Europe faces stronger competition for spot LNG cargoes as Asian demand rises.
ANZ analyst Daniel Hynes said increased cooling demand and higher Chinese imports, which reached 10.9 million metric tons in June, pushed Asian LNG prices to $18.50 per million British thermal units.
The competition comes as European gas inventories remain below seasonal averages.
Storage levels stood at 52.52% of capacity, compared with 63.02% a year earlier, according to Gas Infrastructure Europe. Inventories were also below the five-year average of 67.8%, according to data from the Swiss Federal Office of Energy.