Upside across the NBP curve on Friday was driven by intensifying geopolitical tensions in Iran, raising the risk of potential disruptions to LNG supply chains.

Gas Market

NBP prices gained back a portion of Thursday’s declines on Friday, but still ended the session lower week-on-week. Upside was driven by intensifying geopolitical tensions in Iran, raising the risk of potential disruptions to LNG supply chains. However, with 10 LNG cargoes currently scheduled to arrive into the UK over the next two weeks, support was limited. The front month contract increased by 1.68p day-on-day to settle at 73.15p per therm. Changeable weather forecasts continued to underlie prompt price movements on Friday. Domestic demand was forecast to decline from this week, with wind speeds also set to increase from today. The Day ahead contract traded flat day-on-day, ending the week at 73.50p per therm, while Within day showed a modest gain of 0.10p by the close.

Power Market

GB baseload contracts tracked gains on the NBP gas market on Friday, with the front month contract showing the largest day-on-day incline. The February 26 contract increased by £1.25/MWh day-on-day to settle at £82.90/MWh, while the Winter 26 contract posted a £0.33/MWh gain to close out the week at £75.65/MWh. Wind output forecasts, increasing from below average up to seasonal normal levels, weighed on the prompt, with the Day ahead contract shedding 10.6% day-on-day to settle at £76.00/MWh. European carbon prices reached new 26-month highs on Friday following strong auction results and an elevated energy complex. European Allowances for Dec 26 increased by €1.34 to settle at €89.58 a tonne.

Oil Market

As uncertainty surrounding Venezuelan oil output continued, crude markets were supported on Friday by fears of disruption to Iran’s oil output. As markets awaited the outcome of meetings between the White House and oil companies regarding Venezuelan export deals, supply concerns were exacerbated by the recent civil unrest unfolding in Iran, a major Middle Eastern producer of oil. Furthermore, concerns surrounding the potential spread of the Russia-Ukraine war added to supply worries following attacks on Ukrainian energy infrastructure. The front month Brent contract gained $1.35 day-on-day to close at $63.34 a barrel, its highest close in 4 weeks. Meanwhile, the West Texas Intermediate (WTI) front month contract posted a gain of $1.36 to close out the week at $59.12 a barrel.

Markets this morning

Friday’s gains have continued into this mornings trade, as rising global geopolitical tensions continue to support NBP prices. The front month contract last transacted 76.75p per therm, a 3.60p premium to its previous close. Activity across the prompt market is so far quiet, although strong flows from Norway and robust LNG send-out support a sideways outlook for today. Crude oil markets have dipped slightly after Iran suggested that it had gained back “total control” following the recent unrest, which has eased supply concerns in the region. The front month Brent contract last went through at $63.21 a barrel, a loss of 13 cents day-on-day.