Fundamentals remained unchanged on Monday and near months settled marginally higher on prompt led gains

Gas Market

NBP futures settled mixed on Monday but movement on the day was marginal.  The fundamentals have remained unchanged for the past week, and the near curve is less than a half a penny up since Tuesday last.  The front months traded in a tight range as the volatility seen through the middle of June due to geopolitical risk has receded.  While Trump remains upbeat for a temporary ceasefire between Israel and Hamas, the war in Ukraine continues and the Russian President has expressed no appetite for peace talks. European gas reserves continue to rise with levels reaching 60.3% full at the weekend but are still well below levels seen at this time last year.  At the close, August settled at 80.00p per therm, up 0.41p while the Winter contract was marginally down at 92.11p.  Prompt prices took some support from forecasts for lower wind generation for Tuesday.

Power Market

Baseload futures recovered Friday’s losses on Monday while lower wind generation forecasts buoyed the prompt.  The front month settled £0.83/MWh up at £73.40/MWh yesterday which was the largest deviation from Friday’s close. Generally, baseload futures added an average of £0.20/MWh on the day but the front month was influenced by gains on the prompt as forecasts for wind generation were revised lower. The carbon markets were subdued at the start of the week and EUAs for 2025 and 2026 settled 0.4% or 30 cent per tonne down.  Mixed energy prices and low trading activity ahead of Wednesday’s tariff deadline were behind yesterday’s lacklustre performance.

Oil Market

Crude oil prices settled higher on Monday with upbeat U.S. demand countering output increases from OPEC+.  Travel over the July 4th weekend increased as Americans took to the road for the public holiday and this is expected to be revealed in inventory reports over the next two weeks.  At the weekend, OPEC+ announced a larger than expected increase in production for August, 548,000 barrels per day, which would leave only around 20% of the 2.2m bpd voluntary cuts outstanding.  However, some of the group have failed to hit monthly quotas so the actual monthly output increase has fallen short. The deadline for tariff agreement is swiftly approaching and in the absence of any trade deals, large tariff increases applied by the U.S. administration could slow global crude oil demand.

Markets this morning

President Trump has created more confusion for the markets after pushing back the date for higher tariffs for some countries. Tomorrow was the latest deadline for tariffs after a 90-day pause and it now looks like this has been delayed to 01-Aug.  Crude oil prices have eased this morning with Brent down 20 cents to $69.38 a barrel for the September contract. Increased gas demand on the continent has led to gains to European gas futures and this is supporting the front of the NBP curve this morning. August is 1.52p per therm higher at 81.52p while the front winter last exchanged at 93.45p, up 1.34p. Prompt prices are stuck on last nights close, while the GB gas system is comfortable against today’s demand of 146mcm.