The November futures contract for the NBP settled at its highest point since mid-June

Gas Market

European gas prices continued to edge higher on Friday as the conflict in the Middle East along with potential strikes at Australian LNG plants propped up prices.  The November futures contract for the NBP settled at 136.70p, its highest point since mid-June while the Summer added 3.90p to close at 141.15p.  NBP futures have recorded gains on five out of the last six sessions with the front month 42.21p higher over the last week alone.  Forecasts for a cold spell at the start of the week supported the prompt as the Day ahead product closed 21.15p higher at 138.20p.  The last time that contract traded at this level was back in February.  The fundamentals remain healthy with up to four LNG deliveries expected at British ports this week while storage levels are close to capacity however the markets will still have fears of an escalation of the conflict in Gaza and workers striking at Chevrons LNG plants.

Power Market

GB baseload futures continued to track NBP futures higher on Friday while gains to carbon prices also added to the upside.  The November contract settled £5.40/MWh up at £125.90/MWh on Friday while over the week £35.65/MWh was added to the front month. Further out, the front Summer contract gained £5.70/MWh to close at £124.85/MWh. Baseload for the day ahead settled at £130.00/MWh a fresh eight-month high as wind generation dips while demand is forecast to increase as temperatures fall. The Spot for carbon EUAs added 38 cent to close at €85.23 per tonne.

Oil Market

Crude oil prices took a steep step up on Friday as Israel prepared for a ground assault on Gaza and fears the conflict would widen.  Brent crude for December delivery added $4.89 to close at $90.89 a barrel, the largest one-day gain since early April when OPEC announced voluntary cuts to production.  It is feared a ground assault could draw neighbouring countries some of which are major oil producers into the conflict and impact oil supplies from the region.  Also adding to the upside on the day was the sanctions the U.S. imposed on owners of tankers carrying Russian oil priced above the cap of $60 a barrel.  There are also concerns that the U.S. could impose sanctions on Iran which would curtail oil supplies and support prices.

Markets this morning

After the strong gains in the gas markets last week, the NBP futures market has opened softer this morning.  Prices have picked up a little from the morning lows with November last going through at 132.00p, 4.70p below Friday’s close but up 4.32p from the earlier low.  Further out the curve, losses are more modest with the Summer down 1.15p to 140.00p.  Prompt prices are unchanged, and the GB gas system is forecast to run marginally long.  Brent for December delivery is 45 cents down at $90.44 a barrel and trading in a tight ranged this morning.

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