Colder Weather and Geopolitical Uncertainty Lift Gas and Power as Oil Firms on Supply Risks

Gas Market

NBP gas prices finished higher on Friday, extending gains for a third consecutive session and ending the week firmer. The front-month Jan-26 contract rose 1.79p on the day to settle at 71.79p/therm, leaving it up 2.26% on the week. Geopolitics remained in focus on Friday after EU leaders agreed a €90bn loan package for Ukraine, while President Putin reiterated Russia’s war demands, dampening hopes of a near-term peace deal. Prompt prices were supported by forecasts for colder weather and weaker wind generation over the Christmas period, with day-ahead gas climbing 2.65p to 73.25p/therm. Upside was limited by strong underlying supply, however, with expectations of higher LNG imports likely to offset any weather-driven increase in demand.

Power Market

GB baseload power futures moved higher on Friday, tracking strength in gas and carbon markets. The front-month January contract gained £2.20 to settle at £85.53/MWh, while colder temperatures and lower wind output lifted prompt prices, with day-ahead power jumping 33.9% to £81/MWh. Wind generation is forecast below normal until Jan 2^nd, lifting gas for power demand. Carbon prices were steadier. The Dec-26 EUA contract traded in a tight range on 19 December, opening at €86.60/t and closing at €87.05/t, ending the week up 1.2% amid thin liquidity. An auction pause into early January, alongside reduced auction volumes expected in 2026, continues to provide underlying support.

Oil Market

Oil prices edged higher on Friday, supported by concerns over potential supply disruptions linked to a possible U.S. blockade of Venezuelan oil tankers, while markets continued to watch for developments around Russia–Ukraine peace talks. Front-month Feb-26 Brent crude rose 65 cents, or 1.1%, to settle at $60.47/bbl. Despite the daily gain, the contract finished around 1% lower on the week, holding above the lows set earlier as traders awaited clearer signals from geopolitical headlines. Geopolitical risks remained in focus. European Union leaders agreed to raise €90bn in borrowing to provide loans to Ukraine over the next two years, rather than using frozen Russian assets. Ukraine also reported its first drone strike on a Russian shadow fleet oil tanker in the Mediterranean, underscoring the growing pressure on Russian oil logistics. However, uncertainty over how Washington would enforce any U.S. move to block sanctioned Venezuelan tankers limited the extent of the risk premium.

Markets this morning

Energy markets are mixed this morning. NBP near-curve gas contracts are down an average of 0.54p/therm, while prompt prices are edging higher as colder temperatures are forecast over the next two weeks. Lower industrial production this week is expected to reduce gas demand across Europe, offsetting weather-driven support. In carbon, the absence of auctions continues to lend support to the Dec-26 EUA contract. The Dec-26 EUA last traded at €87.53/tonne up 50c on the day. Oil prices are firmer after U.S. officials said an oil tanker was intercepted in international waters off the coast of Venezuela, raising supply disruption concerns. Brent crude is trading at $61.05/bbl, up 58 cents on the day.