Expectations of a U.S. interest rate cut provided support to crude oil prices on Friday

Gas Market

NBP futures opened softer on Friday but quickly changed tack following reports of a short gas system and rising prompt.  The GB gas system remained under pressure all day and was still 3mcm short at the market close. The Spot ended the day just over a penny higher while the Day ahead product for Monday was down 1.08p as wind generation and mild temperatures are expected to temper demand.  Friday was the first day of gains for the NBP curve since the modest gains on 20-November. The market has weakened due hopes of a peace agreement between Russia and Ukraine while ample LNG supplies have also added to the downside. Seven cargoes are due to berth at UK ports over the coming week which will likely keep LNG flows robust. At the close, the January contract settled 0.92p per therm up at 70.95p, but still down 4.34p for the week.

Power Market

Strong wind forecasts for the week ahead coupled with falling carbon prices countered the support from the modest gains witnessed on NBP near curve on Friday. The front month for GB baseload power, January, settled £0.17/MWh down day-on-day which brought the decline for the week to £5.43/MWh. Wind generation could top 20.0GW on Monday and remain elevated for much of the week according to the latest forecasts. Baseload for the Day ahead fell by 23.9% or £19.03/MWh on Friday. In the carbon markets, there was a short early rally in prices which quickly gave way to a selloff and European Allowances declined by an average of €0.71 per tonne. UKAs for 2025 and 2026 settled an average of £0.82 per tonne.

Oil Market

Expectations that the U.S. Federal Reserve could announce an interest rate cut in the week ahead provided support to crude oil prices on Friday as Brent, the global benchmark racked up a third day of gains. Interest rates could be lowered by a quarter of a percentage point for American borrowers which would increase demand as lowering interest rates leaves borrowers more disposable income to spend.  The lack of progress in the peace talks also added some upside to crude oil prices while geopolitical tensions between the U.S. and Venezuela was a factor too. Brent settled 49 cents higher at $63.75 a barrel the highest settlement for the front month in almost three-weeks. West Texas Intermediate for January delivery closed at $60.08, up 41 cents a barrel.

Markets this morning

NBP futures have opened firmer this morning with the front month leading the curve with a 1.60p per therm rise this morning. Buying activity has increased as traders take advantage of the recent drop in prices.  With no further positives on the peace talks, contracts past the front month are between 0.80p and a penny higher while contracts past the summer have yet to trade.  Prompt prices have stalled but a long gas system with low demand of 220mcm for today could put the Spot price under pressure. In the crude oil markets Brent has reversed all of Friday’s gains with the latest exchange going through at $63.24 a barrel. The group of Seven countries and the EU are in talks to weigh replacing the price cap on Russian oil exports with a full maritime services ban.