Gas Market
NBP futures opened softer on Tuesday with the front month trading down to 92.56p per therm before reports that Iran had launched air strikes on Israel came filtering through. The market appeared to have shrugged off Israels ground invasion in Southern Lebanon as near months shed up to 5.00p. In the afternoon the early gains were reversed and contracts entered positive territory with November increasing by over 6.00p intra-day, however at the close the front month was only slightly up at 97.77p per therm. Considering the escalation in the Middle East conflict, yesterday’s price movement was modest as much of the premium for the conflict has already been factored into prices. On the prompt, the Spot and Day ahead responded to a short system as GB gas demand rose above 175mcm and supplies lagged a touch. At the close, the Spot was 1.50p higher while the Day ahead product added 1.90p.
Power Market
GB baseload futures settled mixed on Tuesday having tracked gas prices lower in the morning before edging higher in the afternoon after the Iranian airstrikes on Israel. While the new front month, November, settled flat, there modest gains posted by contract out to next summer. Gains were curtailed by the downward moving Carbon prices with both EUAs and UKAs releasing more premium yesterday as the Spot for EUAs declined by €1.44 per tonne.
Wind forecasts remain buoyant, and generation is expected to remain above 10.0GW for Wednesday. However, the outage at the IFA2 interconnector is not expected to be resolved until the end of the week and baseload for the Day ahead settled higher yesterday.
Oil Market
Front-month Brent and WTI jumped as high as 5% during yesterday’s session before settling around 2.5% higher, following reports of escalating tensions between Iran and Israel. Prior to the news, the oil market was trading near a two-week low due to expectations of increased supplies and weak global demand growth. Iran launched 180 missiles in an assault on Israel yesterday afternoon, as Israeli attacks continued in southern Lebanon despite calls for a ceasefire from the UN. Iran, an OPEC member accounting for 4% of global oil output, could see disruptions in its oil supplies if tensions increase. Starting in December, OPEC is scheduled to raise output by 180,000 barrels, which could help offset concerns surrounding potential supply disruptions from Iran. Brent front-month November futures settled $1.86 up at $73.56 a barrel, with WTI experiencing a similar increase to close at $69.83.
Markets this morning
After a volatile day for the gas and oil markets yesterday, gas futures have flip-flopped between gains and losses with latest trades for near month contracts down on yesterday’s close. The November contract last traded at 97.38p which is just 0.39p down while the contract for the first quarter of next year is down almost a half a penny. Prompt prices have shrugged off a short gas system with both the Spot and Day ahead products over a penny lower. GB gas demand is pitched at 184mcm for today and supplies are 7mcm shy. Crude oil prices have continued to firm with Brent $1.82 a barrel higher on the back higher tensions in the Middle East.
