A stuttering start to the Israel Hezbollah ceasefire provided some support to crude oil prices

Gas Market

It was the last day of trading for the December contract on the ICE platform yesterday and the outgoing front month for the NBP yielded 1.55p to settle at 115.44p per therm.  It was the third day of declines in succession for the near curve, which averaged losses of 1.60p yesterday, and the market was a little calmer after the recent volatility.  A quicker than expected draw on European gas in storage contributed to some of the risk premium added recently however, fundamentals are looking healthier for the start of December with temperatures forecast a couple of degrees above the norm while wind generation should also be higher than the average.  European storage levels are at 86.7% after the recent cold spell and should stay close to that while demand eases and LNG cargoes arrive over the next couple of weeks.  

Power Market

GB baseload futures continued to ease on Thursday as the gas markets seemed to settle down after the recent volatility. Losses to the front months were capped at £0.60/MWh yesterday while contracts from the summer out were marked £0.18/MWh down on average.  Carbon prices were mixed on the day with EUAs closing the session with a €0.40 per tonne loss while UKAs were an average of 54p per tonne higher. GB wind generation is expected to climb above 17.5GW on Friday which is almost 50% up on Thursday’s levels.  This pressured the Day ahead contract which turned in a loss of £6.63/MWh for the day.

Oil Market

Brent settled 45 cents a barrel higher on Thursday as Israel and Hezbollah both made claims that the other was violating the recently agreed ceasefire.  This rocky start may have cooled hopes for a full ceasefire in the Middle East and offered support to crude oil prices yesterday.  The U.S. market was closed due to the Thanksgiving Holiday yesterday but the Personal Consumption Expenditures Price Index (PCE) for October increased to 2.8% which could threaten a December decline to interest rates by the U.S. Federal Reserve. Elsewhere, OPEC+ have postponed it’s policy meeting until 05-December but are still expected to delay it’s plan to increase output by 180,000 per day.  

Markets this morning

Gas prices have resumed their decline this morning with a further penny off the near NBP curve. January has taken on front month status on ICE and the last trade was completed at 116.50p. Most contracts that have traded are down by around a penny and are close enough to the lows of the morning so far.  Trading for the prompt has been a little slower and the Day ahead is down 0.35p.  The GB gas system is showing a deficit of 5mcm against today’s demand of 249mcm.  Crude oil prices are down this morning as risk to supplies in the Middle East eases as the Israel Hezbollah ceasefire continues.  The January contract for Brent is down 62 cents to $72.66 a barrel.