Further uncertainty in energy markets caused gas prices to surge higher on Wednesday

Gas Market

More uncertainty in energy markets drove gas prices higher on Wednesday as near months for the NBP curve settled an average of 6.13p per therm higher.  The ceasefire agreement between Russia and Ukraine fell short of expectations and both sides accused each other of violation of the limited agreement within the first day.  The gas markets reacted to the reports of Russia’s missile attacks on Ukraine from the get-go yesterday and gains were extended through the session.  April, the front month peaked 7.71p above the previous session’s close but fell back a touch to post a day-on-day gain of 6.19p to settle at 106.20p.  Prompt prices reacted to the strong gains on the near curve and the Spot and Day ahead products added 5.75p and 4.85p respectively.  

Power Market

With gas and carbon posting strong gains on Wednesday, the GB baseload power curve was marked significantly higher too.  The front month, April added £5.60/MWh to settle at £91.25/MWh.  The Summer-25 contract was assessed at £86.75/MWh which was up £4.35/MWh day-on-day.  Carbon EUAs tracked the rise on the gas curve and contracts out to Dec-27 increased by 4.5% or €3.28 per tonne. Wind generation is forecast to fall below 2.0GW on Thursday but baseload for the day ahead shrugged this off and declined by £2.54/MWh. Demand for gas fired generation is forecast to ease while output from solar photovoltaic sources is forecast to double to 6.1GW.  

Oil Market 

Crude oil prices settled marginally higher on Wednesday as geopolitical tensions increased while U.S. Fed left interest rates unchanged.  The Fed anticipates a further cut in interest rates could be made this year but cautioned this with uncertainty surrounding a possible tariff war. U.S. tariffs on Canada, China and Mexico raise concerns of slower demand for oil and is bearish for crude oil prices. On the bull’s side, Russia and Ukraine have both accused each other of violating the 30-day ceasefire after the first day so there are real doubts whether a full ceasefire can be agreed. Meanwhile Israel has continued to launch missile strikes on Gaza and was preparing to launch another ground invasion while President Trump maintains the U.S. will hold Iran to account for attacks on shipping in the Red Sea.  Brent settled 22 cents up at $70.78 a barrel.  

Markets this morning

After yesterday’s volatile session, NBP futures are a little calmer this morning.  Near months opened firmer and increased by around 1.50-2.00p per therm but have since reversed direction and latest trades have seen contracts fall into negative territory.  The April contract last exchanged at 105.84p which is down 0.36p while the Summer-25 contract is flat.  Prompt prices are moving sideways save for the Day ahead which is down 1.18p to 104.00p as gas demand continues to ease due to the mild temperatures.  Crude oil prices are flat, and Brent is 9 cents up at $70.87 a barrel amid uncertainty around the partial ceasefire between Russia and Ukraine.