Dutch and British wholesale gas prices on retreated from three-year highs on Tuesday morning, mirroring movements in the oil market after US President Donald Trump said the Middle East conflict could end "soon".
The benchmark Dutch front-month contract at the TTF hub fell by €7.98 to €48.47 per megawatt hour (MWh) by 08:52 GMT, data from the Intercontinental Exchange showed.
It hit an intraday high of €69.50/MWh on Monday, the highest level since January 2023.
The British contract for April was down 19.90p at 123.63p per therm.
Trump said on Monday that the United States had inflicted serious damage on Iran's air force and navy and predicted the conflict would end well before the initial four-week time frame he had laid out but he also warned of further strikes.
The comments sent both oil and gas markets lower late on Monday, and oil prices continued to fall after the gas market closed, putting pressure on gas prices on Tuesday morning, said Arne Lohmann Rasmussen, chief economist at Global Risk Management.
Still, with the world's second-largest liquefied natural gas (LNG) exporter Qatar having shut production and unable to ship stored LNG out of the region via the blocked Strait of Hormuz, the gas market remains constrained.
Usually, LNG supply into Europe peaks in March and April when demand in Asia is muted by milder weather, said Ben Samuel, energy markets analyst at brokerage Marex.
"But this year those volumes will be competed for tooth and nail, a contest that is likely to remain fierce until some kind of stability returns to the gulf region," he added.
Over 80 per cent of Qatari LNG is shipped to Asian customers, who are now competing with European buyers for cargoes from other suppliers, particularly the United States.
European gas storage is now below 30 per cent of capacity and will require an additional 11 billion cubic metres (bcm) this summer to reach the level of fullness seen at the end of September last year, Samuel said.
(Reporting by Nora Buli in Oslo; editing by Nina Chestney)