Gas Market
UK NBP gas contracts fell on Friday as markets took a cautious approach ahead of the Iran-U.S. peace negotiations, with reports also emerging that Israel was open to peace talks in Lebanon. While the ceasefire appeared to be holding, the Strait of Hormuz remained only partially open, with only selected vessels cleared to transit. With limited LNG vessels passing through the Strait, the European Network of Transmission System Operators for Gas warned that this could constrain Europe’s ability to refill storage this summer. EU gas storage currently sits at 29.34%, compared with 35.11% at the same point last year. The front month settled 7.07p lower on the day and 25.31p lower on the week at 109.69p/therm, with similar losses extending out to Winter-26. The day-ahead contract fell 3.38p to 111.63p/therm, tracking the near curve lower despite a rise in gas-for-power demand as wind generation dropped to well below seasonal norms over the weekend.
Power Market
Most UK baseload power curve contracts shed value in line with gas market losses as geopolitical risk eased amid further ceasefire talks between Iran and the United States in Islamabad. The front month May-26 fell £3.38 to £87.75/MWh, down 12.25% since the start of the week. The Winter contract settled down £2.63 on the day or £12 lower on the week at £91.50/MWh. The day-ahead contract bucked the trend, gaining 12.92% to £104/MWh, supported by below-average wind and solar power forecasts.
The Dec-26 EUA contract edged lower on Friday, falling 1.19% to close at €72.94/tonne, as traders consolidated positions ahead of the weekend and the planned Iran-U.S. ceasefire talks in Pakistan. Despite the modest decline, the contract held above its 20-day moving average of €70.30/tonne and closed higher for a third consecutive week.
Oil Market
A de-escalation of geopolitical tensions ahead of weekend talks between the U.S. and Iran weighed on crude oil markets on Friday. The front month Brent contract settled at $95.20 per barrel, showing a small loss of 72 cents following a relatively flat day of trading due to the cautious anticipation of the outcome of the peace talks and further information on an increase of the passage of vessels through the Strait of Hormuz. The absence of immediate infrastructural disruption in the region due to the conditional ceasefire eased near-term supply worries leading to traders selling off their position through the week. As a result, the front month Brent contract showed its largest week-on-week fall since 2022, with Friday’s settlement price being 12.7% lower than the previous weeks’ close. The West Texas Intermediate (WTI) made similar losses, with the May 26 contract shedding $1.30 by the end of the session to settle at $96.57 a barrel.
This Morning
European and British gas prices rose on Monday after U.S.-Iran talks over the weekend failed to reach a deal, jeopardising a fragile two-week ceasefire and raising the prospect of renewed military strikes. The U.S. military announced it would begin a blockade of all maritime traffic entering and exiting Iranian ports, further unsettling markets. The front month May-26 gas contract was up 11.04p at 120.73p/therm while Winter-26 gained 8.93p to 119p/therm, retracing Friday’s losses as traders awaited confirmation of whether U.S. strikes against Iran would resume. Brent crude responded sharply to the breakdown in talks, rising $7.22/bbl to $102.42/bbl. The Dec-26 EUA contract bucked the energy complex, falling €1.09/tonne as carbon tracked broader equity market weakness.
Yesterday in Summary
Energy markets were broadly lower on Friday as geopolitical risk eased ahead of Iran-U.S. peace negotiations in Islamabad, with oil posting its biggest weekly decline since August 2022, as Brent crude settled down 12.7% on the week at $95.20/bbl. UK NBP gas contracts tracked lower, with the front month contract shedding 25.31p since Tuesday’s close at 109.69p/therm. UK power curve contracts fell in line with gas, though the day-ahead climbed higher as wind generation dropped well below seasonal norms. Carbon markets saw modest pressure, with the Dec-26 EUA slipping to €72.94/tonne, though the contract held above its 20-day moving average and notched a third consecutive weekly gain.
