The prospect of Ukraine transiting Azerbaijani gas saw the NBP plummet on Thursday

Gas Market

Gas prices began the day in positive territory with markets supported by the exploding handheld communication devices in Lebanon as Israel continued its mission to allow residents return to its northern territories. Front month prices peaked at 88.04p/th before prices collapsed shortly after lunch. Unconfirmed news hit the market that Ukraine had reached a deal to transit Azerbaijani gas to Europe to replace the expiring Russian transit agreement. Gas prices for delivery in October swung by 10.05p/th reaching an intra-day low of 77.99p/th before settling at 79.11p/th. If confirmed the new transit deal relieves any concerns for supply disruptions into 2025. Losses were not restricted to the near curve as Winter-24 and Summer-25 had intra-day losses of 10.90p and 9.10p respectively. By the close both contracts had remained at a discount to Wednesday’s settlement with Winter-24 closing at 87.84p/th and Summer-25 at 83.79p/th.

Power Market

The collapse on the NBP gas market int eh afternoon following the reports that Ukraine would transit Azerbaijani gas replacing Russian gas saw the GB baseload futures market follow suit and make substantial losses. The Winter-24 saw some of the largest losses as it closed £4.80/MWh lower than Wednesday’s close at £76.98/MWh. The EUA Dec-24 contract had begun proceedings trading above the previous settlement due to moderate but consistent buying. However, the collapse on European gas hubs saw carbon prices track lower. The Dec-24 contract closed at €63.33/tonne, while the spot market shed1.4%.  

Oil Market

 The market shrugged off concerns for global economic activity and focused primarily on the large interest rate cut by the U.S. Federal Reserve on Wednesday. Prices on Thursday increased by $1.23 following the Fed’s half a percentage point cut which was larger than had been expected. Also supporting the oil price was the continued risk in the Middle East. Prices were already moving higher earlier in the week following the walkie-talkie and pager explosions, when reports of bombing in southern Lebanon by Israel supported prices further. The bullish sentiment was tempered by the continued weak economic data emanating from China, the world’s largest importer of oil. The latest figures showed industrial economic growth slowed to a five-month low which helped to cap the gains as the Brent front month closed at $74.88/bbl.  

Markets this morning

Following the market collapse yesterday afternoon gas prices have, unsurprisingly, rebounded in early morning trading with large volumes of front month gas having already traded amid profit taking. October last traded at 82.00p/th and Winter-24 at 90.00p/th. Spot gas has also traded higher however day ahead is currently showing little to no activity. The UK system is marginally undersupplied which could be supporting the prompt market. Brent crude oil is trading marginally lower, in what is essentially a flat market with prices still finding support from the interest rate cut earlier in the week.