Energy prices are moving lower this morning after the response from Iran at the weekend

Gas Market

After a slow start on Friday near NBP months edged higher through the day after Russia’s continued targeting of Ukraine’s energy infrastructure. The front month settled with a gain of 2.69p to close at 76.38p, bringing the gain for the week to 10.30p or 15.6%. The Winter-2024 contract added 2.99p on Friday and 11.63p over the week as premium was added due to geopolitical risk.  Temperatures are forecast to drop below the norm next week and this coupled with lower wind generation could see demand increase next week which provided support to the prompt. The Spot and Day ahead added 1.75p and 2.55p respectively but the Week ahead and Balance of month contracts settled 5.00p and 3.88p higher.

Power Market

The week ended with more premium being added to baseload power prices as the NBP curve and carbon prices continued to firm.  May settled £1.65/MWh higher at £64.75/MWh but the increase for the week was £7.95/MWh.  The Winter contract rose by £2.20/MWh on Friday which brought the weeks gain to £8.63/MWh.  Heavy buying activity continued to support Carbon EUAs and contracts for 2024 and 2025 settled €2.82 and €2.92 per tonne higher. Forecasts for strong wind generation over the weekend and Monday weighed on prompt on Friday. Baseload for Monday was down £4.25/MWh to settle at £26.75/MWh. The EDF nuclear reactor at Torness with a capacity of 640MW will be offline until mid-June. 

Oil Market

Crude oil prices settled higher on Friday with fears that retaliation from Iran for the attack on its consulate in Damacus was imminent.  On Thursday night/ Friday morning the U.S. and other nations issued warnings to citizens in Israel not to travel outside the major cities. Iran had pledged to take revenge for Israel’s attack on 01-April and the U.S. had been trying to prevent a retaliatory strike which could escalate the conflict.  Brent for June delivery settled 71 cents up at $90.45 a barrel but despite this gain, the global benchmark was 72 cents a barrel down week-on-week. The U.S. benchmark, West Texas Intermediate settled at $85.66, up 64 cents per barrel. 

Markets this morning

Energy prices have opened lower this morning after the response from Iran at the weekend.  The attack was announced with plenty of time for reaction to intercept the drones and missiles and Iran have said this is their final action unless Israel decides to retaliate. In the markets, Brent is down $1.08 a barrel to last trade at $89.37 a barrel.  NBP futures opened higher but latest trades have seen premium fall away and the May contract is down 0.58p to 75.80p. Further out, the Winter-2024 contract is 0.67p lower at 93.05p.  High wind generation for today has seen gas demand fall back to 183mcm and the GB gas system is balanced.