Gas Market
UK wholesale gas prices drifted lower on Monday, breaking a five-day run of consecutive gains, despite the diplomatic stalemate between the U.S. and Iran. While geopolitical risk remained heightened, healthy supply fundamentals and weak demand levels weighed on gas prices, although the downside was constrained by the persistent uncertainty. The front month contract for May 26 delivery shed 1.12p to close at 110.79p per therm, while the Winter 26 contract posted a day-on-day loss of 0.60p to settle at 112.55p per therm. Losses across the prompt market similarly reflected the strong supply outlook, as well as above-normal temperatures and weak gas-for-power demand levels. Higher Norwegian imports via the Langeled pipeline added further downside, with the Day ahead contract declining by 1.25p to close out the session at 109.25p per therm.
Power Market
The moderate day-on-day decline exhibited by the UK wholesale gas market fed into losses across the GB Baseload near curve on Monday. The front month contract for May 26 delivery shed £0.55/MWh by the close to settle at £89.45/MWh. Meanwhile, on the prompt, a combination of weak demand levels and strong wind output forecasts weighed on contacts, with Day ahead falling by £6.00/MWh day-on-day to settle at £100.00/MWh.
With markets largely lacking clear direction due to the ongoing uncertainty surrounding the Middle East, European carbon markets were largely flat on Monday. Dec 26 European Allowances settled at €75.00 a tonne, representing a day-on-day gain of just 12 cents.
Oil Market
Crude oil markets rose on Monday as peace talks between the U.S. and Iran stalled and shipments through the Strait of Hormuz remained limited. Each day the diplomatic stalemate continues between 10 and 13 million barrels of oil fail to get to the international market. As such, the front month Brent contract closed up for a sixth consecutive day to settle at $108.23 a barrel, representing a day-on-day gain of $2.90. Elsewhere in the Middle East, the ceasefire between Israel and Lebanon remained fraught, adding further geopolitical risk. The West Texas Intermediate (WTI) contract for June delivery settled at $96.37 a barrel, edging up by $1.97 on its previous close.
Markets this morning
With no real indication of a complete reopening of the Strait of Hormuz, nor prospects of further peace talks between the U.S. and Iran in sight, gas and oil markets are again in positive territory this morning. The front month UK wholesale gas price last went through at 111.50p per therm, up 0.71p on yesterday’s settlement. The front month Brent contract is up by 2.7% on its previous close as concerns grow around the longevity of the Middle East conflict. U.S. President Donald Trump’s unhappiness with the latest Iranian proposal to end the war leaves the situation at a deadlock, and with vital oil supplies unable to reach the global market.
