Reports that the U.S. and China had restored a fragile trade truce, renewing economic sentiment, fed into gains across the NBP curve on Wednesday.

Gas Market

On Wednesday, the NBP curve retraced the previous days’ losses following reports that the U.S. and China had managed to restore a fragile trade truce, de-escalating tensions between the two economic power houses. The agreement is expected to result in restrictions on rare earth minerals and magnets, which are essential for modern technology manufacturing, being resolved. The front month contract gained 3.67p day-on-day to close at 84.17p per therm, while the Winter 25 contract increased by 3.11p to close out the session at 95.57p per therm. Gains across the prompt were more muted, with supply and demand fundamentals remaining largely unchanged day-on-day. The Day ahead contract posted a 1.75p gain to close at 83.55p per therm while on the Spot, the Within day contract settled at 84.00p per therm, up 2.10p per therm.

Power Market

Upward moves across the NBP gas curve and carbon markets drove the upside experienced by GB Baseload futures on Wednesday. The front month contract posted a £2.95/MWh day-on-day gain to close at £77.25/MWh, while further out, the Winter 25 contract closed at £87.18/MWh, up £2.30/MWh. Meanwhile, the Day ahead contract moved in the opposite direction, shedding 36.3% day-on-day to settle at £52.40/MWh. Strong gains across the energy complex as well as news of corrosion at a French nuclear reactor sparked a rally across European carbon markets on Wednesday. The EUA Spot contract increased by €1.26 day-on-day to end the session at €73.38 a tonne.  

Oil Market

Crude oil prices made gains on Wednesday, buoyed by the news that a trade deal had been reached between the U.S. and China as well as heightened unrest in the Middle East. The tentative agreement struck between the world’s two largest economies resulted in a de-escalation of trade tensions, however it remains unclear as to how economic growth and global oil demand will be affected. Meanwhile, reports yesterday that the U.S. was preparing to evacuate its Iraqi embassy due to heightened security concerns in the region compounded the upside. The front month Brent contract closed at its highest level in 10-week, gaining $2.90 day-on-day to settle at $69.77 a barrel.  

Markets this morning

Yesterday’s upside has continued into this morning to a modest degree, with the front month contract last going through at 84.80p per therm, up just 0.63p day-on-day. Supply and demand fundamentals remain stable and largely flat day-on-day, which should hamper any potential gains on the Spot and prompt, although trade activity there is so far quiet. Crude oil prices have pared back some of yesterday’s gains as the market assesses a U.S. decision to move personnel from the Middle East ahead of talks with Iran over the latter’s nuclear-related activity. The front month Brent contract last went through at $69.10 a barrel, down 67 cents day-on-day.