Gas Market
More premium was added to the NBP curve on Friday after Donald Trump’s warning to Iran that his patience was running out. There have been no new proposals from either side last week but the tone between the two appears to be changing as Trump gets frustrated with the lack of progress to a peace deal. It is believed Iran is close to unveiling its proposal to manage the Strait of Hormuz, but this is likely to benefit only Iran and is unlikely to be considered as a move forward by the U.S. After trading between 118.20p and 125.07p per therm, the front month, June, settled at 123.66p which was a gain of 6.88p for the day or 15.55p or 14.4% for the week. Gains to contracts out to the winter were around 6.80p on average while the Summer-27 contract was 3.16p up at the close. Forecasts for warmer temperatures for the next week should temper gas demand and allow storage facilities to increase refill rates to build reserves for the winter.
Power Market
Sharp gains on the NBP curve provided support to GB baseload futures on Friday as peace talks between the U.S. and Iran lost momentum over the week. The June contract posted a gain of £3.70/MWh to settle at £102.45 but the July contract recorded the highest gain of the day, £4.15/MWh being assessed at £101.90/MWh at the close. Baseload for the Day ahead was 11.7% or £12.18/MWh higher as wind generation is forecast to drop below 2.5GW on Monday.
Carbon EUAs firmed on Friday with contracts adding an average of €0.72/ tonne, however, UKAs moved in the opposing direction with contracts closing down by around £0.67/ tonne. There are concerns that a prolonged leadership contest for the Prime Minister could jeopardise the UK-EU linkage talks which were due to conclude this summer.
Oil Market
Crude oil prices pushed higher on Friday following the U.S. President Trump’s statement that he has run out of patience with Iran. Both Trump and the Iranian foreign minister’s words through the week have dampened hopes of an immediate reopening of the Strait of Hormuz, with markets pricing in the uncertainty of when a peace deal will be reached and the possibility of a return to hostilities between the two sides. Talks between the U.S. and Chinese presidential counterparts ended with no indication that China would step in to help resolve the conflict in the Middle East, remaining firm in their opinion that the war should never have started in the first place. The front-month Brent contract settled $3.54 up to close at $109.26 per barrel, a $7.97 a barrel increase across the week. The West Texas Intermediate (WTI) price saw a similar movement, settling at $105.42 per barrel following a gain of $4.25.
Markets this morning
Natural gas and crude oil prices are trading higher this morning following Donald Trump’s latest warning to Iran that the time to make a deal is running out. The UAE have reported a drone strike on an electrical generator on Sunday but representatives from Iran’s foreign Ministry have said today that peace talks are still ongoing through Pakistan so there are still hopes a deal can be done and the Strait of Hormuz can be opened fully. The NBP front-month contract is currently trading up 2.79p at 126.45p per therm while the front Winter contract has added 3.51p. The July contract for Brent is trading at $110.08 per barrel, up $0.82 from Friday’s close.
