On Wednesday, NBP gas prices attempted a modest recovery following the sharp losses seen over the previous two sessions.

Gas Market

On Wednesday, NBP gas prices attempted a modest recovery following the sharp losses seen over the previous two sessions. With European storage levels continuing to decline, the near curve appeared reluctant to fall further in order to continue to attract robust levels of LNG supplies. Following what was a choppy session, the front month contract increased by 0.69p by the close to settle at 75.14p per therm. Meanwhile, the prompt market showed a greater appetite for gains, driven by forecasts of a short cold weather spell over the coming days. The colder temperatures are expected to drive up domestic demand levels, while lower wind speeds will also support gas-for-power demand levels. The Day ahead contract increased by 0.85p to end the session at 78.00p per therm.

Power Market

Losses exhibited by the GB Baseload curve on Wednesday were largely driven by a weaker carbon market. The front month contract shed £0.30/MWh day-on-day while the April 26 contract dropped by £1.75/MWh to settle at £69.00/MWh. The prompt market also showed a modest decline as temperatures and wind speeds remained unchanged. The Day ahead contract shed $3.66/MWh day-on-day to end the session at £81.97/MWh. While European carbon prices extended their recent run of losses to a modest degree on Wednesday, UK Allowances were more volatile, dropping by over 5% before the close. Strong selling activity and political uncertainty drove Dec 26 UKAs down by £2.62 to settle at £49.24 a tonne.

Oil Market

Crude oil prices edged up on Wednesday, supported by potential supply risks and indications for stronger demand levels. Simmering tensions between the U.S. and Iran following comments made by Donald Trump that suggested he was considering sending a second aircraft carrier to the Middle East loomed over oil markets despite the expected resumption of negotiations between the two nations. However, with no material impact on oil supplies as yet, upside was limited. A weaker dollar and reports of lower Russian oil production levels were also supportive factors, although expectations of a global oil supply glut continued to stifle gains. The front month Brent contract increased by 60 cents to settle at $69.40 a barrel.

Markets this morning

European carbon prices have shown substantial losses so far this morning following comments made by German Chancellor Friedrich Merz that suggested potential changes to the market. Dec 26 Allowances have shed €5.63, or 7.18%, since yesterday’s close to last go through at €72.80 a tonne. Meanwhile, the NBP curve is largely flat, with the front month contract up by just 0.28p so far. In contrast, the Day ahead contract is being supported by the colder weather forecasts, posting a 3p premium to its previous settlement. Crude oil prices have retreated back from earlier highs to last transact at $69.01 a barrel, with uncertainty surrounding the Iran-U.S. negotiations remaining in focus.