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EMEA Natural Gas Update: Hormuz Transits Ease Supply Risks Amid Heatwave

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European natural gas futures edged lower in after-hours trading on Wednesday as easing geopolitical risk from US-Iran peace talks reduced supply risk premiums, even as weather-driven demand swings and tight balances continued to underpin volatility.

The front-month Dutch TTF contract price fell by 2.51% to 40.96 euros ($46.55) per megawatt hour, while the UK NBP contract dropped 3.22% to 97.06 British pence ($1.28) per therm.

CNBC, citing Kpler data, reported that vessel transits through the Strait of Hormuz in June have reached their highest level since the US-Israel strike on Iran on Feb. 28, though flows remain well below prewar levels when around 15 million barrels per day passed through the strait. The risk rating for shipping through the corridor has been downgraded from 'critical" to "moderate," by the Joint Maritime Information Center.

On the European demand side, Mind Energy said Monday's heatwave-driven demand spike and weaker renewable generation temporarily supported prices, but expects downward pressure ahead as forecasts turn milder across Central and Western Europe from early July.

Weather disruption continued to distort power and gas-linked demand. The Guardian reported that the UK imported electricity from Europe on Tuesday at more than six times normal prices as a heat dome reduced wind generation and constrained supply. Low wind speeds across continental Europe also weighed on renewable output, while elevated river temperatures in France reduced nuclear generation by limiting cooling capacity. Five UK gas-fired power stations reportedly reduced output due to "ambient" conditions, cutting about 2.5 gigawatts from the system.

In Asia, ANZ analyst Daniel Hynes said China's LNG imports are rising into the summer peak, with the 30-day moving average at about 178,000 tonnes per day, the highest since early February. The increase in Asian buying could hamper Europe's ability to rebuild gas inventories ahead of winter.

Data from Gas Infrastructure Europe shows EU gas storage at 46.97% of capacity, compared with 56.23% a year earlier and below the five-year average of 61.4%, according to the Swiss Federal Office of Energy.

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