Gas Market
Near NBP futures surged higher from the opening on Monday on the back of attacks on Iranian oil infrastructure and reports that a new supreme leader had been appointed in Iran. The news triggered fears in the oil and gas markets that the war may not be as short as the U.S. Administration would have indicated. The April contract peaked at 170.00p per therm but premium was slowly eroded in the afternoon as reports that the EU intends to strengthen its presence in the region to ensure the safe transit of oil and gas tankers through the Strait of Hormuz. The front month shed over 26.00p intra-day to settle at 143.53p. Gains for the summer months averaged 7.86p yesterday while the Winter contract added 8.48p. Prompt prices gained between 7.00 and 10.00p yesterday but with gas demand expected to ease over the coming days as wind generation increases, the prompt could come under pressure later in the week.
Power Market
The early surge in gas prices on the NBP provided an early lift to the baseload curve on Monday but gains were pared back through the afternoon. The front month, April settled £2.25/MWh higher at £104.75/MWh, but the summer and winter contracts held onto much of the early gains, settling at £102.00/MWh and £100.95/MWh respectively due to poorer liquidity on those contracts. Gains to the NBP prompt fed into the power prompt and left the Day ahead product 7.7% or £9.00/MWh higher.
In the carbon markets, prices continued to trade within recent ranges and European Allowances for Dec-26 and Dec-27 edged higher by around a euro per tonne while UKAs softened yesterday falling by an average of 1.6% or £0.67/ tonne.
Oil Market
The May contract for Brent surged to $119.50 a barrel on Monday after reports of attacks on Iranian oil infrastructure and the appointment of Iran’s new supreme leader. The appointment of Mojtaba Khamenei, the son of the previous supreme leader, sparked fears that the war in Iran could run longer than Donald Trump initially indicated. The longer the war continues the more oil is shut in as reports that Saudi Aramco has begun to cut production at two of its oil fields, joining the UAE, Kuwait and Iraq in lowering output. Gains were pared back later in the session following reports that the EU intends to strengthen its presence in the region to ensure the safe transit of oil and gas tankers through the Strait of Hormuz which left the May contract for Brent close at $98.96 a barrel.
Markets this morning
‘The war in Iran could end soon’, were the late comments from the U.S. President, Donald Trump last evening, which sent crude oil prices tumbling in Asian markets over night. The decline has continued as markets opened in Europe as Brent dipped to $88.05 a barrel before recovering to last trade at $91.31, down $7.65 a barrel from last night’s closing price for the May contract. In the gas markets, April, the front month for the NBP, is down around 12.5% or 18.59p to 124.94p per therm while the full summer contract is 19.72p lower at 115.00p. EUAs are moving in the opposite direction with Dec-26 last exchanging €1.59 up at €71.13 per tonne.
