Dutch and British wholesale gas contracts fell on Tuesday morning, erasing all of Monday's gains, amid persisting uncertainty about the geopolitical state of play regarding the closure of the Strait of Hormuz.
The benchmark Dutch front-month contract at the TTF hub was down €0.95 at €45.47 per megawatt hour (MWh) by 08:05 GMT, data from the Intercontinental Exchange (ICE) showed.
The British contract for April was down 2.13p at 114.66p per therm.
"Today should see a calmer start to the session, given no major updates on the geopolitical side. Only comments on contact between the negotiating parties continuing could add some bearish direction to the price development," said LSEG analyst Ulrich Weber.
The TTF contract surged as high as €51.30/MWh on Monday after peace talks between the US and Iran held in Islamabad, Pakistan failed over the weekend and the US announced a blockade of the Strait of Hormuz for Iran-linked ships, although some vessels passed through still.
Iran itself has effectively closed the strategic shipping lane used to distribute around 20 per cent of global liquefied natural gas (LNG) supply for the majority of non-Iranian traffic.
Negotiating teams from the US and Iran could return to Islamabad this week, four sources said on Tuesday.
"The market now awaits further news about the conflict as Europe is right now in a rather critical situation with very low storages and a strong need for stable supply to refill ahead of next winter," said analysts at Mind Energy.
EU gas storage sites were last 29.5 per cent full, compared with around 35.4 per cent at the same time last year, Gas Infrastructure Europe data showed.
(Reporting by Nora Buli; editing by Nina Chestney)