NBP futures spiked on Thursday following the overnight bombardment on Ukraine’s energy infrastructure

Gas Market

 NBP futures spiked on Thursday following the overnight bombardment on Ukraine’s energy infrastructure by Russia. Near months settled an average of 5.95p higher in response to the news that two underground gas storage facilities were hit by missiles. While early reports stated that both facilities were still operational gas prices crept higher through the session and the front month, May, closed at 73.69p, its highest close since the end of January.  The air strikes also took out Ukraine’s Trypilska power plant, a coal fired power station near Kyiv with a capacity of 1,800MWh which left the country needing to negotiate imports for peak hours from Europe. Prompt prices were elevated by gains to the near curve and the Spot and Day ahead added 4.45p and 5.00p respectively.  

Power Market

GB baseload futures were supported by the sharp gains in NBP futures yesterday while higher carbon prices also propped up the longer curve.  The front month gained 8.4% or £4.88/MWh and closed at £63.10/MWh. Further out the Winter-24 contract settled £5.25/MWh higher and settled at £82.13/MWh.  Wide supply margins due to strong renewables and low demand pressured the Day ahead product yesterday which settled at £31.00/MWh. The early spike in wholesale natural gas futures sent carbon prices soaring yesterday which encouraged more buying activity for short positions as stop losses were triggered.  Carbon EUAs gained over 9.0% at the close as the Dec-24 and Dec-25 contracts settled at €68.85 and €71.52 per tonne respectively.  

Oil Market

A strong dollar weighed on crude oil prices yesterday as the ECB hinted that interest rates could be on the way down as inflation tracks the target of 2.0%. Across the Atlantic, inflation has been falling at a slower pace and there are concerns the Fed will push out expected interest rate cuts past June.  Losses were tempered on the day as concerns that Iran will retaliate for the bombing of its consulate in Damascus mount.  The U.S. expects Iran to take some retaliatory action but has warned against escalating the conflict.  At the close, Brent was 74 cents down at $89.74 a barrel.  

Markets this morning

Crude oil prices have opened firmer with Brent almost a dollar up in early trades as tensions in the Middle East rise.  Any revenge Iran may take on Israel risks a disruption to oil supplies from the region.  After yesterday’s sharp rise in gas prices, the NBP futures market is more subdued today but near months are edging slightly higher. May is trading at 74.05p which is 0.36p above lasts nights close while remaining summer months are between 0.50p and a penny higher. Carbon prices have continued to increase this morning with the Dec-24 contract for EUAs €1.75 up on the last trade.