The price of gas in Europe is more volatile due to the growing competition from LNG

Dutch and British wholesale prices of gas have slowed the huge gains they made this week, but remain volatile due to increased competition worldwide among buyers for replacements of lost Qatari LNG cargoes.

Data from the Intercontinental Exchange showed that the benchmark 'Dutch front month contract' at the TTF hub had increased by 1.02 euros to 51.75 euros a megawatt hour (MWh), as of 1026 GMT.

After initially trading at 6.00 lower, the British contract for April rose 2.25 pence to 133.75 cents per therm.

The European gas price has risen this week due to the Iran conflict, which has shut down?exports from Qatar. Qatar provides around 20% of global LNG supply. Qatari LNG is primarily sold in Asia. Buyers are looking for alternatives. Several LNG tankers, including those from the US and Nigeria, are diverting their routes to Asia. Qatar's Energy Minister Saad Al-Kaabi told the Financial Times that Qatar would need "weeks or months" to get back to normal deliveries even if there was an immediate end to the?war.

Analysts at Bernstein stated that based on the current price, Europe has lost the bid war against Asian competitors for US cargoes.

They added that "TTF would likely have to increase its current capacity by another 40% to 50% if the Qatari power outage continues for more than a week." Enel, the utility in Italy that sources 25% of its LNG supply from Qatar, reported on Friday having lost "five" April cargoes.

Saku Jussila, LSEG analyst, says that Europe is in a'much better position short-term, and can afford to divert some cargo.

He added, "However this is not sustainable throughout the summer if conflict continues to escalate."

Jussila stated that LSEG lowered their?European gas send-out forecasts for April by 400 gigawatt-hours (GWh) each day due to the conflict, and also lowered their 46-day'storage outlook.

Gas Infrastructure Europe's data shows that EU gas storage sites were 29.6% filled at the end of last year compared to 37.2% around the same time last.

The benchmark contract on the European carbon markets increased by 0.62 euros to 70.97 euro per metric ton. (Reporting and editing by Nina Chestney; Nora Buli)

(source: Reuters)