Dutch and British wholesale gas prices slowed huge gains seen this week in the wake of the Iran crisis on Friday morning, but remain volatile amid growing competition among buyers globally to replace lost Qatari liquefied natural gas (LNG) cargoes.
The benchmark Dutch front-month contract at the TTF hub was up €1.02 at €51.75 per megawatt hour (MWh) by 1026 GMT, data from the Intercontinental Exchange (ICE) showed.
The British contract for April was up 2.25p at 133.75p per therm, after initially trading six pence lower.
European gas prices have surged this week as the Iran conflict has shutdown exports of LNG from Qatar, which provides some 20 per cent of global supply.
The majority of Qatari LNG is sold to Asia, where buyers are now seeking alternatives and several LNG tankers from the US as well as Nigeria are already diverting to Asia and away from Europe.
Qatar's energy minister Saad al-Kaabi said that even if the war ended immediately it would take Qatar "weeks to months" to return to a normal cycle of deliveries, he told the Financial Times in an interview published on Friday.
Based on current prices, Europe is losing the bidding war with Asian competitors over US cargoes, analysts at Bernstein said in a note.
"TTF will likely need to jump another 40 per cent to 50 per cent from where it is currently, just to keep the lights on, if the Qatari outage persists beyond a week or two," they added.
Meanwhile, Italy, which sources 25 per cent of its LNG from Qatar and where utility Enel said it has lost five April cargoes, said on Friday it is looking for alternative suppliers.
Still, Europe is in a much better position in the short-term and can afford some cargo diversions, said LSEG analyst Saku Jussila.
"However, this is not sustainable through all summer if the conflict gets prolonged," he added.
LSEG lowered its European LNG send-out forecast for April by around 400 gigawatt hours (GWh) per day because of the conflict and lowered its 46-day storage outlook, Jussila said.
EU gas storage sites were last 29.6 per cent full, compared with around 37.2 per cent at the same time last year, Gas Infrastructure Europe data showed.
(Reporting by Nora Buli; editing by Nina Chestney)
