Gas Market
The NBP gas market was choppy on Wednesday against the backdrop of Iran firing 200 ballistic missiles at Israel, Israel vowing retaliation and regular Israeli infantry crossing into Lebanon across the day. Despite the clear escalation of the conflict in the Middle East that had seen risk premium feed into gas prices over the last number of weeks, gas prices actually traded lower than Tuesday’s settlement following the overnight developments. All traded NBP gas contracts increased in the early afternoon with the November contract increasing to 99.95p/th following reports of incidents at two Israeli embassies in Europe. However, prices were in decline once more just prior to settlement. The November contract fell to 95.56p before settling at 95.86p/th, a day-on-day loss of 1.91p/th.
Power Market
GB baseload power futures all settled lower tracking the movements on the NBP gas market, while a decline in UK carbon allowances added to the bearish tone prior to the close. The new front quarter, Q1-25, posted a loss of £1.30/MWh by the close having spent much of the session trading below Tuesday’s close. The Day ahead baseload contract fell in trading with pressure coming from increased wind generation. However, losses were restricted on the prompt due to
maintenance on the IFA1 interconnector between the UK and France. The unavailability of the interconnector limits the supply of cheaper nuclear and hydro power from the continent.
Oil Market
The escalation of the conflict in the Middle East saw oil contracts continue their upward trend in early trading. The firing of over 200 ballistic missiles by Iran towards Israel led to Israel vowing to retaliate as well as the movement of Israeli troops into Lebanon. In early trading the Brent front month contract increased to $76.15/bbl with the market wary of any risk to supplies attacks on Iran might cause. Iran currently produces circa 4% of global oil output. However, prices were soon retreating following reports from the US that crude inventories had risen by 3.9 million barrels in a week. A rise in crude inventories signals falling refinery utilization and a fall in demand for fuel. As a result, the gains from the war in the Middle east were capped at 34 cents as the Brent contract for December delivery settled at $73.90/bbl.
Markets this morning
Following yesterday’s turbulent session gas prices are back in the ascendancy at this early stage of proceedings. The front month has increased 96.46p/th, having retreated from the high of 97.25p/th. Similarly, the Q1-25 contract last traded at 100.66, just off the high of 101.25p/th. Proceedings on the prompt are quiet this morning with little movement from last night’s close amid an oversupplied UK system. Crude oil markets are creeping higher as one eye remains firmly on events in the Middle East, with some of the upward momentum restricted by the fact global supplies of oil have yet to be interrupted by the events there.
03 October 2024
