The cold spell forecast to last for the next two weeks continued to underpin prompt prices yesterday

Gas Market

  The cold spell forecast to last for the next two weeks continued to underpin prompt prices yesterday while the near curve yielded most of the morning’s gains late in the session. Temperatures across Northern Europe are expected to move below seasonal norms while wind generation is also tipped to remain below recent elevated levels and could pressure gas supplies. European gas in storage has fallen to just over 52% compared to 65% at this time last year so a prolonged cold spell could threaten gas reserves in Europe.  LNG deliveries remain robust though, and send out on Wednesday topped 73mcm, almost 25% of GB demand. Imports from Norway exceeded 100mcm with the lion’s share entering through the Langeled feed at Easington. After a volatile session, the Spot and Day ahead products were 2.35p higher on average while the front month, February, added 1.19p to settle at 83.06p.  Contracts past March settled lower with the Summer-26 contract down 0.42p at 65.46p.  

Power Market

   A bullish start to trading in the gas and carbon markets provided support to the baseload curve yesterday. February, the front month, gained £2.50/MWh to settle at £94.75/MWh. Summer months fell back but were still marked around 1.2% higher at the close as carbon prices strengthened for a seventh session.  Baseload for the day ahead moved in the opposing direction with wind generation forecast to increase for Thursday. The EU Climate Commissioner, Wopke Hoekstra is reported to have said that talks on linking the EU and UK carbon markets will begin next week and this supported carbon prices yesterday. EUA contracts out to Dec-28 settled 1.4% higher on average while UKAs added 3.0%.    

Oil Market

Tensions in the Middle East increased on Wednesday which provided support to crude oil prices as Brent settled $1.05 a barrel up at $66.52. It was the fifth day of gains as crude oil prices have rallied since reports of the protests in Iran broke. Its feared oil supplies from the region could be disrupted if there’s an escalation or intervention from the U.S. Gains on the day were tempered by the latest oil data from the U.S. The Energy Information Administration published its weekly report yesterday which crude oil and gasoline stocks increased by more than expected. 3.4 million barrels of crude oil was deposited over the previous week while gasoline stocks rose by 9.0m barrels. In other news, OPEC have agreed to no further increases in output for the start of 2026 and published a report which predicts 2027 global demand growth to be around 1.34m barrels per day which is in line with growth predictions for 2026.  

Markets this morning

NBP prompt and near curve contracts reacted to forecasts for cooler temperatures for the next two weeks yesterday. Gains were seen across the curve as tension in Iran increased, but contracts from the Summer out reversed all gains and went on to settle lower with the Summer-25 contract down 0.42p to 65.46p. The February contract closed 1.19p higher at 83.06p having traded up to 85.75p earlier. Prompt prices settled an average of 2.10p up yesterday. In the crude oil markets, Brent recorded its fifth day of gains on the back of the unrest in Iran and potential for U.S. intervention which could lead to a disruption of supplies in the region.