Near NBP futures settled an average of 3.95p per therm higher on Thursday

Gas Market

After a fairly calm morning in the gas markets, volatility returned in the afternoon as Israel stepped up airstrikes on Lebanon.  Monday sees the first anniversary of the Hamas attacks on Israel and a year on the conflict has escalated and moved beyond Gaza with Israel launching attacks on Beirut and southern Lebanon. The possibility that Israel may target Iran’s oil fields sent natural gas and oil prices higher over the afternoon.  Brent increased by 5.0% yesterday and added to the upside in the gas market. NBP winter months posted the lion’s share of gains on the day with November adding 4.42p per therm while the Summer-25 contract settled 2.72p higher. On the prompt, the Day ahead increased by 1.90p following reports that an unplanned outage at the Troll field may not be repaired until the weekend.

Power Market

GB baseload power futures all settled higher tracking the movements on the NBP gas market. NBP climbed 4.6% on the back of fears of escalation in the Middle East disrupting Iranian energy facilities. The front month for GB baseload, November, gained £3.00/MWh, which was up 3.7% at £85.10/MWh. Gains diminished further out the curve and the contract for the first quarter of 2025 added £2.35/MWh to close at £88.65/MWh. The Day ahead baseload contract fell by almost £5.00/MWh after forecasts for wind generation for the weekend and the week ahead were revised upward.  Wind generation fell below seasonal averages yesterday but is forecast to rise above 8.0GW for Friday.  

Oil Market

Oil prices soared to their highest level in more than a month late on Thursday, as traders reacted to comments made by US President Biden indicating that Israel might engage in retaliatory strikes against Iran’s oil industry. Brent crude rose by more than 5%, settling at $77.62 per barrel. Meanwhile, WTI settled up $3.61 (5.2%) at $77.72 per barrel. Earlier in the session, gains were tempered when Libya announced it would resume full oil production from Thursday. Libya typically pumps about 1.2 million barrels per day (bpd), while Iran produced 4.0 million bpd in 2023. Although other OPEC members have spare capacity to absorb a disruption in Iranian production, there are concerns that Iran could widen the conflict. A wider escalation could prompt Iran to block the Strait of Hormuz or attack Saudi infrastructure, as it did in 2019.

Markets this morning

The gas markets are more subdued this morning as near months are slightly down in early trading.  The bid and ask spreads are tighter than has been seen recently as November traded between 98.75p and 100.34p with the last exchange going through at 99.93p. Israel has continued airstrikes on Beirut overnight targeting senior Hezbollah leaders according to reports this morning and crude oil prices have continued to rise.  Brent is currently trading at $78.32 a barrel. The contract has moved above the 50-day average and the next test will be the $80 a barrel mark. It’s over six weeks since Brent last settled above the $80 a barrel.