The recent volatility exhibited on the NBP prompt and near curve continued yesterday, with concerns around declining European storage levels and continued cold weather supporting prices.

Gas Market

The recent volatility exhibited on the NBP prompt and near curve continued yesterday, with concerns around declining European storage levels, continued cold weather and geopolitical unrest supporting prices. European storage levels currently stand at 51.9%, 12.3% lower than this time last year. And with long-term forecasts suggesting cold conditions will persist across Europe elevating demand, supply fundamentals appeared tight. However, with 11 LNG cargoes expected to arrive into the U.K before the end of the month, and with Donald Trump’s comments yesterday afternoon that signalled a potential easing of the unrest in Iran, prices fell back somewhat from their intra-day highs. The front month contract gained 3.69p by the close to settle at 86.75p per therm. The cold weather and limited wind output forecasts also drove upside across the prompt, with the Day ahead contract increasing by 3.55p to settle at 89.75p per therm.

Power Market

GB Baseload contracts followed the upward trajectory of the NBP near curve on Thursday. The front month contract gained £3.80/MWh by the close to settle at £98.55/MWh. Further out, losses were more muted, with the Winter 26 posting a modest £0.30/MWh gain. Below average wind output forecast for today supported the prompt market, with the Day ahead contract increasing by 8.0% day-on-day to close out the session at £99.34/MWh. After a volatile trading session on Thursday, European carbon prices eased during the afternoon to show only modest day-on-day changes. European Allowances for Dec 26 declined by €0.02 to close at €92.03 a tonne, while Dec 26 UK Allowances posed at £0.21 day-on-day loss.

Oil Market

Crude oil markets plunged on Thursday after President Donald Trump suggested that the unrest in Iran was coming to an end, easing supply disruption fears. Unlike the gas market, the comments appeared to reduce the risk premium that had built up in recent days, with the front month Brent contract falling by 4.1% to settle at $63.76 a barrel. Further downside was provided by a reported rise in U.S. crude and gasoline inventories, while forecasts of an oversupplied global oil market was once again in focus with Venezuela beginning to reverse oil production cuts made under a U.S. embargo. Similar to losses on the Brent market, the West Texas Intermediate (WTI) front month contract for February delivery declined by $2.83 day-on-day to close out the session at $59.19 a barrel.

Markets this morning

The NBP near curve’s upward trajectory is showing no signs of waning this morning. The front month contract last went through at 91.70p per therm, a gain of almost 5p on yesterday’s close. Gains appear to be driven by a colder long-term forecast that threatens storage levels and supports the need for additional supply. Although activity on the Spot and prompt is yet to get going, a forecasted rise in gas-for-power demand over the coming days may support short term prices. Oil prices also edged up this morning as markets take stock of potential supply risks. The front month Brent contract last went through at $64.31 a barrel, a day-on-day gain of 55 cents so far.