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EMEA Natural Gas Update: Futures Slide Amid Steady Hormuz Traffic Despite Flaring US-Iran Tensions

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European natural gas futures slid on Thursday as shipping traffic through the Strait of Hormuz picked up despite renewed hostilities between the US and Iran.

The front-month Dutch TTF contract dropped 3.01% to 58.600 euros ($68.13) per megawatt-hour, while the front-month UK NBP contract was down 3.20% to 143.500 British pence ($1.92) per therm.

Commercial vessel transits along the strait, which accounted for one-fifth of global LNG flows, stood at 31 on Wednesday, according to data from ShipFinder.

This comes despite the US and Iran resuming military exchanges following a temporary pause earlier this week. In a post on X, US Central Command said it had targeted several "military command centers, missile and drone facilities, coastal surveillance and defense sites, and maritime capabilities."

US President Donald Trump told Fox News that he warned Iran that it was "going to get a beating" for targeting US bases in the surrounding regions, while speaking with Fox News.

According to Daniel Hynes, a senior commodity strategist at ANZ, the recent attack on Egypt's Damietta LNG terminal reignited concerns that supplies from the Middle East would be curtailed "for the foreseeable future."

This comes at a time when European natural gas inventories remain below historic levels, at 56.15% of capacity, compared to 67.59% during the corresponding period a year ago, according to Gas Infrastructure Europe.

Inventories were also significantly below the five-year averages for this period, at 72.2%, according to data from the Swiss Federal Office of Energy.

To make matters worse, the Western, Central and Mediterranean regions of Europe are bracing for another unprecedented heatwave in August, with temperatures expected to surge past the 40 degrees Celsius mark to as high as 45 degrees Celsius in some parts, according to a report by Severe-Weather EU.

This is set to add to the region's space cooling demand and gas-fired power burn, weighing on its efforts to refill gas inventories ahead of winter.

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