Gas Market
The gas markets continued to weaken on Wednesday morning on growing optimism that talks could bring about an end to the war in the Middle East. NBP futures were down 10.00p within the first hour of trading and the April dipped to a low of 123.00p on the day. The afternoon brought a change of mood with Iran rejecting a 15-point plan for peace from the U.S. and issuing its own five conditions including an end to all aggression and assassinations, costs for damages and reparations and recognition of Iran’s sovereign right over the Strait of Hormuz. Following these reports, the early losses were pared back leaving the front month to settle at 132.77p per therm, posting a loss of 3.58p on the day. The full summer-26 contract ended the session 3.08p down at 131.76p. Prompt prices tracked the increases on the near curve through the afternoon and the Spot and Day ahead products closed with a loss of 3.00p.
Power Market
The war in the Middle East continued to create volatility in the energy markets yesterday and GB baseload futures responded to movement on the NBP curve. Early losses were almost fully recovered by the close of play, but contracts were marked marginally lower at the bell. April was down £0.42/MWh but the May contract, which assumes front month status next week, was more actively traded and settled £1.28/MWh lower at £98.13/MWh.
Baseload for the Day ahead rebounded off a five-month low yesterday as wind generation is forecast to drop by around 30% for Thursday. The contract settled at £97.55/MWh, posting an increase of £57.92/MWh over Wednesday’s price.
Oil Market
Mixed messages from both sides of the conflict in Iran continued to drive volatility in the crude oil markets yesterday. The front month contract for Brent, May, traded in a range between $97.15 and $103.37 a barrel yesterday with morning losses being recovered through the afternoon. The contract ended the session below the high of the day posting a loss of $2.27 a barrel after settling at $102.22. Contracts had opened lower on the back of reports that talks of a ceasefire between the U.S. and Iran were taking place in the background and the U.S. released it’s 15-point plan. This was rejected publicly in the afternoon by an Iranian official and they also denied talks were occurring between both sides. However, the U.S. proposal issued through a mediator from Pakistan was not formally responded to which has provided some hope that Tehran was considering the proposal at least.
Markets this morning
The gas and oil markets have opened higher this morning as contradicting narratives from Iran and the U.S. cause confusion. Iran continues to deny talks with U.S. officials are occurring while President Trump has doubled down and said Iranian officials are afraid to admit openly that talks are taking place. In the markets, Brent is trading $3.82 a barrel higher at $106.04 a barrel while UK gas prices are between 3.20p and 4.20p higher. The latest trade for April has gone through at 136.75p while the May contract which assumes front month status next Tuesday last exchanged at 136.95p. Prompt prices have ticked up in line with the front of the curve and the Day ahead product is 4.00p higher at 134.50p.
