Gas Market
NBP curve prices recovered part of the previous day’s losses on Wednesday as shipping risks in the Strait of Hormuz intensified and uncertainty surrounding the U.S.–Israeli conflict with Iran persisted. Reports that Iran had begun laying mines in the Strait, alongside further attacks on vessels, heightened concerns over potential supply disruptions. The front-month contract rose by 6.63p day-on-day to settle at 127.46p per therm. As a result of the curve gains, European gas prices narrowed their discount to East Asian LNG benchmarks, increasing the incentive for cargoes to remain within the Atlantic Basin. The strength along the near curve supported gains in the prompt market. Additionally, forecasts of stormy weather conditions from today raised concerns over possible delays to LNG cargoes scheduled to arrive in the U.K., providing further short-term price support. The Day ahead contract increased by 5.60p to settle at 122.50p per therm.
Power Market
Gains exhibited across the NBP gas market on Wednesday due to heightened uncertainty surrounding the Middle East conflict fed into increases in GB Baseload contracts. The front month contract for April delivery posted a £3.50/MWh gain by the close to settle at £96.00/MWh. Meanwhile, the prompt market edged down, with particularly strong wind levels forecast for over the coming days feeding the downside. The Day ahead contract shed £5.62/MWh to settle at £59.33/MWh.
A further drop in speculative trading activity weighed on European carbon prices on Wednesday. European Allowances for Dec 26 shed €1.68 day-on-day to settle at €71.70 a tonne, while the Spot EUA contract closed at €70.20 a tonne, down €1.45 on its previous settlement.
Oil Market
Crude oil prices made gains on Wednesday on heightened supply disruption fears despite news that the International Energy Agency (IEA) had decided to release a record amount of strategic oil reserves. Three more vessels were hit by projectiles in the Strait of Hormuz, bringing the total number of ships stuck in the region to at least 14 since the Iran war began. President Trump has said that the United States is prepared to escort tankers through the strait, however reports suggest that the U.S. Navy has refused requests for support from the shipping industry as the risk of attacks is too high. With supply fears worsening, the IEA recommended the release of 400 million barrels of oil, the largest such move in its history. However, reports suggested this was ultimately insufficient to resolve supply losses from a prolonged war in the Middle East. As a result, the front month contract posted a $4.18 gain by the close to settle at $91.98 a barrel.
Markets this morning
NBP gas prices have opened higher again this morning as conflict in the Middle East persists. Further attacks on Saudi Arabian oil fields and overnight drone attacks on Oman have added to oil and LNG production fears. The NBP April 26 contract reached an intra-day high of 137.01 per therm earlier, but has since retreated back to 131.25p per therm, representing a day-on-day gain of 3.99p. Crude oil prices have also bounced, as the heightened attacks on oil and transport facilities in the Middle East has fuelled concerns of a prolonged conflict. The front month Brent contract has gained $4.34 on its previous close to last transact at $96.32 a barrel.
