European gas prices fell sharply on Friday with December shedding a further 4.18p per therm

Gas Market  

NBP futures continued to fall further through Friday’s session with hopes that Ukraine was close to securing an alternate to the gas transit deal with Gazprom.  The current supply agreement expires in December and Ukraine was reported to be negotiating with Azerbaijan for an alternative feed into Slovakia and Hungary. Currently only around 5% of Europe’s gas imports come from Russia as Central Europe has become less dependent on gas supplies from Russian Bear. The new front month, December settled 4.18p per therm down on Friday which brought the decline for the week to over 12.00p. Contracts further out fell by an average of 2.75p. On the prompt, the Spot and Day ahead contracts settled 2.70p and 3.08p lower respectively while the gas system remained in equilibrium for most of the session.

Power Market

Lower gas prices weighed on the baseload power curve on Friday as December took up the lead month focus. The contract was down £3.18/MWh at the close on Friday and shed £9.08/MWh for the week. It was the third straight day of declines for the curve, and the Summer-25 contract closed £2.22/MWh down at £72.65/MWh. Average wind generation forecasts were trimmed back by around 2.0GW for the week ahead which propped up prompt prices on Friday.  Baseload for the Day ahead added £15.15/MWh to settle at £106.50/MWh.

Oil Market

There was a small gain for crude oil prices on Friday but the strong loss from Monday meant prices were down for the week.  It was the third session of declines in succession for Brent as the January contract ticked up by 29 cents a barrel.  The global benchmark had added over $2.00 a barrel in post settlement trading on Thursday night after reports that Iran were planning a retaliatory strike on Israel emerged.  Previous Iranian attacks on Israel in April and early October were repelled for the most part and were seen as a show of strength more than an attempt to escalate the conflict. Most of that premium was unwound before the close of play on Friday and rumours that OPEC+ would defer their planned increase in production for December held prices above Thursday’s settlement.  

Markets this morning

A short GB gas system has pushed up prompt prices this morning.  Demand for today has increased to over 223mcm and the system is currently 13mcm short. LNG send out is toping 35mcm this morning as reports of three LNG tankers are bound for UK reports this week.  The Spot last traded at 99.75p per therm while the Day ahead product is at 100.25p.  On the curve, near months are around 2.00p higher with December last exchanging at 101.27p. Crude oil prices have also opened stronger this morning and Brent for January delivery is trading $1.92 a barrel higher.