The news that President Zelensky said he’d work with Washington to negotiate a peace agreement has sent the energy markets into decline this morning

Gas Market

After Wednesday’s unexpected losses natural gas futures were broadly flat on Thursday as the market awaited Ukraine’s response to the latest proposal to end the war.  Near months drifted higher during the morning session without any official details from the latest peace proposal being released but it is believed that Ukraine would not yield territory in the Donbas nor agree to cut numbers in their army which could leave them vulnerable to further invasions in the future. Late in the session prices eased as an immediate rejection of the proposal was not forthcoming which reignited hopes that an agreement could be brokered. At the close, December settled 0.23p up at 81.51p per therm and contracts past this were flat. Prompt prices save for the Spot softened yesterday as the current cold snap is forecast to break on Friday however losses were trimmed by forecasts for low wind generation.

Power Market

Forecasts for wind generation to fall into low single figures on Friday boosted the baseload prompt as the Day ahead increased by 28.3% or £23.47/MWh yesterday. Wind generation has averaged almost 15.0GW over the last week and is expected to drop under 5.0GW on Friday.  Reports of an unplanned outage at ETF’s Torness 2 reactor also added to the upside which also fed into the front month. December closed £0.53/MWh up at £83.28/MWh. Carbon prices opened firmer on Thursday and continued to climb through the session as buying activity increased. The Dec-26 EUA contract peaked at €83.82 before a late selloff saw prices fall back and the contract settled at €83.20 per tonne, posting a gain a of 36 cent.

Oil Market

The crude oil markets awaited reaction from the Ukrainian President to the latest peace proposal yesterday and prices settled slightly lower. It is believed that the latest proposal includes Ukraine ceding territory to Russia while also reducing its armed forces, both of which have been rejected in the past by the Ukrainian President. U.S. sanctions on Russia’s Rosneft and Lukoil are to kick in fully from Friday and the impact of reduced revenues from energy seems to be forcing Putin to enter peace talks although it doesn’t look like his demands have changed. After the market closed there were reports that President Zelensky said he would agree to negotiations on the latest peace proposal which sent prices lower. At the close, Brent for January delivery was 13 cents down at $63.38 a barrel.

Markets this morning

The news that President Zelensky said he’d work with Washington to negotiate a peace agreement has sent the energy markets into decline this morning.  Brent for January delivery has slipped by $1.38 to $62.00 a barrel.  Carbon EUAs have softened with the Dec-26 product down €1.06 per tonne.  NBP futures are down by almost 2.00p per therm with December, the front month, last trading at 79.60p, price levels not seen since March 2024. Prompt prices have also eased this morning with the GB gas system forecast long for today against a demand of 336mcm.  While heating load is expected to reduce, wind generation is forecast to drop below 5.0GW for today which has added to gas demand.