Gas Market
There were more wide swings for near wholesale natural gas contracts on Thursday as markets reacted to the war in the Middle East. On several occasions the front months ran up increases of over 10.00p per therm only for the gains to be clawed back before firming again. The front month met resistance at 140.75p per therm before settling at 131.50p, posting a gain of 4.62p day-on-day. The Summer contract traded between 120.58p and 110.00p and eventually settled 5.20p higher for the day at 116.98p. Prompt prices rose on the back of the gains on the near curve and the Day ahead product ended the session at 130.273p. There were reports that the Russian President is considering halting gas exports to Europe yesterday. The EU has reduced dependency on Russian supplies from around 45% before the Invasion of Ukraine in 2022 to around 12%. European storage gas levels are at 29.59% but the current pricing spread between the summer and winter does not provide sufficient incentive to restock supplies.
Power Market
The volatility in the gas markets was also witnessed in the GB baseload market on Thursday. The escalation of the conflict in the Middle East continued to drive uncertainty in the gas and oil markets and near months for the baseload curve responded by adding an average of 3.2% or £3.00/MWh. The front month settled at £102.60/MWh while the full summer contract closed at £93.75/MWh. EUAs looked like they would consolidate Wednesday’s sharp losses until a late recovery took prices marginally higher for the day.
Forecasts for lower wind generation for Friday along with the gains witnessed on the NBP prompt provided support to the power prompt yesterday. Baseload for the Day ahead settled 3.9% up at £123.31/MWh.
Oil Market
After closing flat on Wednesday, the front month for Brent rose significantly yesterday as the war with Iran escalates. The conflict has shut down the Strait of Hormuz, through which around 20% of global oil supplies transit. Iraq has had to ease back on production as the closure of the waterway is preventing exports of oil and its storage levels are believed to be close to capacity. It’s been reported that there are around 300 oil tankers trapped in the Strait since the war began last Saturday. Attacks on oil tankers in the Gulf region continued yesterday while reports that China is considering taking action to reduce its fuel exports exacerbated the gains on the day. Brent for May delivery settled $4.01 higher at $85.41 a barrel. The U.S. benchmark, West Texas Intermediate, for April set a fresh 21-month high closing at $81.01, with a gain of $6.35 a barrel.
Markets this morning
As the war in the Middle East enters its seventh day, gas and oil prices have continued to rise this morning. Attacks on and Iran and Lebanon have intensified over night with Tel Aviv, in Israel being targeted by retaliatory strikes from Hezbollah. The front month for the NBP curve, opened flat this morning before easing by around 6 to 7.00p per therm, however, the latest trade for April has gone through at 134.06p, which is up almost 10.00p intra-day or 2.56p above last night’s close. Crude oil prices remain elevated with Brent adding $1.34 to last exchange at $86.75 a barrel. Carbon EUAs have firmed this morning with contracts for Dec-2026 and Dec-2027 around 80 cent per tonne higher.
