March 26 contract extends losses to 16.68p/th over across the past two sessions

Gas Market

Near-curve NBP gas prices extended their decline on Tuesday as the geopolitical risk premium tied to recent U.S.–Iran tensions continued to fade, leaving the market to refocus on underlying fundamentals. Support from weather risk also weakened after the UK Met Office further downgraded the probability of a mid-February cold spell linked to a Super Stratospheric Warming (SSW) event, now seen at just 40%, down sharply from 80% last week. This easing outlook has reduced concerns over a potential surge in heating demand, which had previously been likened to the 2018 “Beast from the East.” The front month traded down to an intraday low of 74.54p/th before settling at 78.52p/th, while summer dipped to 69.50p/th and closed at 71.28p/th. Losses were partially pared late in the session following reports of the U.S. downing an “aggressive” drone and Iranian vessels approaching a U.S.-flagged tanker in the Straits of Hormuz, lending support into the close.

Power Market

GB Baseload contracts came under pressure on Tuesday, dragged lower by a softer NBP gas market and declines in UKA carbon allowances. Front-month gas fell 3.5%, while the UKA Dec-26 contract dropped £1.13/tonne to close at £62.15/tonne. Easing fears of a mid-February cold spell further weighed on sentiment. Offsetting some of the losses, the Day-ahead baseload power contract edged higher amid reduced wind speeds, which curtailed renewable generation. Following confirmation from the EU Commission that the ETS will be extended, Dec‑26 EUA prices slipped sharply, closing down nearly 3% at €81.27/tonne. The decline reflects market beliefs that the extension could result in potential delays to phase‑out timelines of free carbon credits which would ease future supply pressures.

Oil Market

Oil prices rebounded on Tuesday, with front-month Brent settling at $67.33/bbl, as renewed geopolitical tensions in the Middle East outweighed recent optimism around U.S.-Iran diplomacy. The $1.03/bbl increase followed a series of incidents in and around the Strait of Hormuz, including the U.S. downing of an Iranian drone and reports of Iranian naval vessels approaching a U.S.-flagged tanker, reviving concerns over security risks along a critical oil transit route. These developments came just a day after crude prices slumped on signs of potential engagement between Washington and Tehran, underscoring the fragility of the diplomatic track. Additional support came from industry estimates pointing to a sharp draw in U.S. crude inventories, helping prices hold onto gains despite lingering uncertainty around the trajectory of U.S.-Iran talks.

Markets this morning

Gas prices have extended their gains from yesterday afternoon, trading higher as renewed tensions in the Strait of Hormuz see the geopolitical premium partially return to the market. The front-month contract last traded 0.94p/th higher at 79.46p/th, while further along the curve, gains are more modest but contracts remain in positive territory. Heightened Middle East tensions are also supporting global oil markets, with front-month Brent last changing hands at $67.79/bbl. Meanwhile, EUA carbon credits continue to drift lower following yesterday’s announcement of an extension to the ETS beyond its previously proposed 2039 end date.