European gas prices dip from 11-week high, but Middle East risks persist

Dutch and British wholesale gas prices mostly eased on Friday morning after scaling fresh 11-week highs on Thursday but remain volatile over the possibility of escalation in the Israel-Iran conflict and the potential of US involvement.

The benchmark Dutch front-month contract at the TTF hub shed €0.23 to €40.05 per megawatt hour (MWh) by 08:49 GMT, LSEG data showed.

On Thursday, the contract briefly rose to €41.85/MWh intraday, its highest level since April 2.

The British front-month contract was down by 3.51p to 95.15p/therm, after also hitting its highest since April 2 at 98.66p/therm on Thursday.

"It was tensions in the Middle East that supported prices, with the market increasingly fearing US involvement in the Israel-Iran conflict," analysts at Engie EnergyScan said in their morning report.

However, official comments that President Donald Trump will decide whether the US will get involved in the Israel-Iran air war in the next two weeks eased concerns over an immediate escalation, with oil prices easing.

A potential closure of the Strait of Hormuz remains a key concern, as it could lock in supplies of liquefied natural gas (LNG).

"The world is in the grip of uncertainty. It cannot be any different for the gas market," Engie's analysts wrote.

The market is likely to stay on heightened alert and be somewhat volatile, especially in reaction to comments made by US President Trump, consultancy Auxilione said in a daily market report.

Meanwhile, Israel has resumed limited natural gas exports from surplus supplies nearly a week after shutting down two key offshore fields.

In Europe, gas demand elevated by a recent heat wave is expected to ease amid lower temperatures and more wind next week, LSEG analyst Dzmitry Dauhalevich said.

The Dutch day-ahead contract eased by €1.55 to €39.95/MWh.

The British day-ahead contract was up 0.75p at 98.75p/therm, while the within-day contract was down 1.00p at 100p/therm.

(Reporting by Nora Buli in Oslo; Editing by Saad Sayeed)