Increased geopolitical tensions boosted Crude oil prices on Monday

Gas Market  

Unplanned outages at the Barrow Terminal provided support to the prompt and near curve contracts of the NBP on Monday.  The event coincided with reports that planned maintenance at Norway’s Troll field are to be extended by six days while works at Nyhamna will take at least a day more than originally allocated. This curbs output from Nyhamna by almost 20mcm until 21-September. Increased arrivals of LNG capped gains on the day with four tankers on route to the Netherland this week while UK ports are also expecting to be topped up. Increased geopolitical tension following the attack on an Israeli oil tanker also added to the upside early on Monday. The Spot and Day ahead products added 1.28p per therm yesterday while near months on the curve added an average of 0.77p.

Power Market

The increase witnessed on the NBP curve provided support to baseload power contracts on Monday. Near months added an average of £1.15/MWh while the Winter contract settled £1.03/MWh higher at £83.00/MWh.  Carbon prices rose to 10-week highs amid an early buying frenzy as compliant deadlines approach. European allowances for Dec-25 and Dec-26 gained 1.8% or €1.36 per tonne. UKAs increased by 1.3% or £1.29/ tonne on average Baseload for the Day ahead rebounded off a near four-week low as wind generation is forecast to fall but remain above the seasonal norm. At the close, the Day ahead was up £32.69/MWh to £81.15/MWh. Wind generation averaged 11.7GW over the last week.

Oil Market

Crude oil prices rose on Monday buoyed by increases in geopolitical tensions. A Houthi attack on an Israeli oil tanker provided early support to prices while in Ukraine President Zelensky promised to react to strikes on power facilities in the North and South by Russian drones at the weekend making the possibility of a ceasefire sound more unlikely. It was the Labor Day holiday in the U.S. which limited trading on the U.S. benchmark, but Brent settled 67 cents a barrel up at $68.15. A weaker dollar on the day also added to the upside yesterday as it makes dollar denominated commodities less expensive to traders with other currencies. The outcome of the meeting of the Shanghai Cooperation Organisation over the weekend seems to show a united front form Russia, China and India and it would appear that China and India are open to trade with Russia for gas and oil.

Markets this morning

The markets are digesting reports that Gazprom has agreed a modest increase in gas pipeline supplies to China while also announcing a plan to build the Power of Siberia 2 pipeline to boost supplies to the East. NBP futures have opened firmer with October trading close to the high of the morning at 80.00p per therm. The Winter contract last exchanged at 86.23p and contracts that have traded past this are less than a half-a-penny higher. Prompt prices are likely to open higher as demand has increased to compensate for lower wind generation in the power stack. Crude oil prices are edging higher as tensions in Ukraine mount with growing concerns for supplies. Brent last traded at $69.29, up $1.14 a barrel.