Gas prices settled higher on concerns of low levels of gas in storage across Europe coupled with increased crude oil prices yesterday

Gas Market

While LNG production in the US is ratcheting up attention turned to the relatively low levels of gas in storage across Europe which boosted summer contracts in Europe and the UK yesterday. European gas storage levels are down to 43% with the Netherlands down at 28% which could mean a long summer of reinjections. Sharp gains to crude oil prices also fuelled the upward trend for the NBP curve as geopolitical tensions increased between the US and Iran yesterday. On the last day as front month for the NBP on the ICE platform, February settled 2.22p higher and the contract expired at 102.62p per therm. Contracts covering the summer months settled an average of 4.60p higher while the Winter-26 contract added 4.04p. Prompt prices gained between 2.00p and 3.20p yesterday drawing support from the gains witnessed on the near curve.

Power Market

GB baseload futures were lifted by gains seen on the NBP curve yesterday with February closing £2.55/MWh higher at £107.80/MWh. Falling carbon prices limited the damage on the day but summer contracts were still marked an average of £2.50/MWh higher yesterday. An increase to wind generation weighed on the Day ahead product which declined by 10.4% or £11.15/MWh. Wind generation is forecast to rise from 15.9GW to 19.0GW. Investors continued to exit carbon positions yesterday and a selloff continued through much of the session. The Spot for European allowances settled at a two-month low closing down by €2.49 to €81.70 per tonne.  UKAs declined by 2.9% or £1.89/ tonne on average.

Oil Market

Crude oil prices rose sharply on Thursday in response to the threat of US attacks on Iran but reversed tack later in the session. Brent reached a near six-month high at $71.89 a barrel after reports that the US Navy and Air Force carried out drills in the Middle East. Tensions increased after Donald Trump repeated his threat of military action saying time is running out for Iran’s nuclear deal.  The dollar has continued to weaken this week which has also buoyed crude oil prices. The greenback has sunk to its lowest level in four years due to erratic policy making and recent geopolitical shocks such as the threat to take Greenland by force. Staying stateside, further support came from The Energy Information Administration’s latest weekly report on Wednesday which showed stocks of crude oil were down by 2.3m barrels to 423.8million barrels last week. At the close, Brent was up 3.4% or $2.31 to $70.71 a barrel.

Markets this morning

Crude oil prices are down this morning in response to a post from Donald Trump which hinted at possible talks with Iran. The US President also posted that Mr Putin had agreed to hold off targeting Ukraine’s energy infrastructure for a week while the current sold spell lingers. Kyiv has been hit with several power outages this year and temperatures are forecast to fall below -30°C this weekend. As usual no details were forthcoming from Washington. The March contract for Brent has shed over a dollar a barrel to last trade at $69.64 a barrel. In the gas markets, March is now the front month for the NBP and is down 0.65p to 93.45p per therm. Longer curve contracts are flat but on the prompt board the Spot is down 1.25p as increased wind has dented gas demand this morning.