Gas Market
UK NBP prices were mixed on Thursday as the market monitored potential U.S.-Iran peace talks, declining early before rallying to settle flat. The front month closed at 120.82p/therm, up 0.11p on the day, while the day-ahead settled down 0.30p at 123p/therm, pressured by steady wind generation and rising Norwegian flows as maintenance at Troll and Visund winds down. Iran’s newly established Persian Gulf Strait Authority continued to rattle markets, with Secretary of State Rubio warning its proposed tolling system would render any diplomatic deal unfeasible. Equinor executives added to the unease, cautioning that Europe could face serious gas storage replenishment challenges if Hormuz disruptions persist into Q3-26. EU storage currently stands at 37%, around 8% below last year and 13% under the seasonal norm of 50%, with low inventories and distorted prices already slowing stockpiling. While below-seasonal storage was largely dismissed last year in anticipation of a significant wave of new LNG supply, that cushion has since been offset by war-related supply losses, bringing storage concerns back into sharp focus.
Power Market
GB baseload contracts moved higher on Thursday, driven by late gains on the UK NBP gas hub, with the front month contract settling £1.35 higher at £102.5/MWh. On the prompt, the day-ahead contract fell £7.75 to £106.75/MWh as wind generation remains above normal, though output is expected to decline over the weekend and stay weak into next week. Strong solar generation is providing some offset, while low UK nuclear capacity, currently below 3GW with the reduced forecast extended, is capping further downside
After months of significant volatility in the EUA market, carbon is experiencing a period of relative calm, likely the cause of the market lacking strong conviction until there is full policy certainty from the EU Commission ahead of the proposed 2026 EU ETS Review in July. The Dec-26 EUA settled down 93c at €74.88/tonne
Oil Market
Oil prices were volatile on Thursday, ultimately settling about 2% lower as uncertainty over resolving the U.S.-Israeli conflict with Iran weighed on markets. Front month Brent settled at $102.58 a barrel, down $2.44, after swinging as much as 4% higher earlier in the session following reports that Iran’s supreme leader issued a directive diminishing hopes for a swift resolution to the war. Tensions were heightened by Iran’s newly announced “Persian Gulf Strait Authority,” which would oversee a “controlled maritime zone” in the Strait of Hormuz. Gains accelerated after Secretary of State Marco Rubio said a proposed tolling system in the strait would make a diplomatic deal unfeasible, then pared after he noted Pakistani mediators would travel to Iran for talks. IEA head Fatih Birol warned that peak summer demand, reduced Middle East exports, and depleting stocks could push the oil market into the “red zone” in July-August. Adding to supply concerns, a Wednesday EIA report showed the U.S. withdrew nearly 10 million barrels from its Strategic Petroleum Reserve last week, the largest drawdown on record.
This Morning
Natural gas prices are weaker Friday morning, with the front month NBP contract down 1.72p at 119.1p/therm, as renewed hopes of a U.S.-Iran peace deal and some profit-taking weigh on prices alongside rising Norwegian supply following recent maintenance. Pakistan continues to mediate between the two sides with some progress reported, though key sticking points including Tehran’s uranium stockpile and control of the Strait of Hormuz remain unresolved. Oil is moving in the opposite direction, with front month Brent up $3.34 at $105.92/bbl as markets remain focused on the same unresolved issues, with the uranium stockpile dispute and Hormuz control keeping the supply outlook uncertain.
