Gas Market
European gas prices surged Monday morning after Iran and Israel exchanged ballistic missiles over the weekend, their first such exchange since 8 April, fuelling concerns that a peace deal remains out of reach. Prices retreated around 11:00 BST after reports that Iran had suspended its attacks, with Trump earlier stating a deal was close while confirming the naval blockade of Iranian shipping in the Gulf of Oman would remain in place until an agreement is reached. The front month spiked around 5% in early trading before pulling back, settling up 3.48p, or 3%, at 120.53p/therm. Prompt prices found additional support from a tighter UK balance, with higher gas-fired power demand on the back of lower wind and solar output lifting the day-ahead contract 3.35p to 121.5p/therm
Power Market
The GB Baseload front month contract rose £2.30 to £105.4/MWh amid strength in gas and underlying support from lower UK nuclear availability. Nuclear output has averaged 3GW in June so far due to maintenance, down from 4.4GW this time last year. Wind output for this week is forecast to hit a low on Wednesday at 4.8GW or a 20% load factor against an average of 7.3GW across the week, leading to £7 increase on the day-ahead to £104/MWh
EU carbon market stabilised after last week’s sharp sell-off, with prices finding strong support around €76 while sentiment remains cautious ahead of the EU ETS review in July. EU finance ministers meet Friday to agree a Council position on CBAM. the Dec-26 EUA contract settled at €76.95, broadly flat on the day.
Oil Market
Oil prices ended Monday $1.16 higher, well off an earlier 5% surge, after Iran and Israel announced a mutual halt to hostilities following an appeal from President Trump. Brent settled up $1.16, or 1.3%, at $94.25/bbl. The earlier rally came after Israel struck a petrochemical plant in Iran it said produced ballistic missiles, with Iran’s Revolutionary Guard retaliating against a similar facility in Haifa, following Israeli strikes on Hezbollah strongholds in Beirut over the weekend. Oil prices, which had surged when the fighting flared, dropped after Iran’s Revolutionary Guards said it was stopping its attacks. Tehran warned however it will resume attacks if Israel continues in Lebanon, a condition it has also tied to any deal with Washington. Gains were capped by demand weakness. Saudi Arabia cut its Asia selling prices for a second consecutive month on easing spot premiums, while Chinese refiners reduced run rates and drew down inventories amid mounting refining losses, weighing on the country’s crude imports.
This Morning
UK wholesale gas prices traded in a narrow range Tuesday morning, steadied by the Iran-Israel ceasefire holding overnight, though both sides have warned hostilities could resume at any point. Near-curve contracts were down an average of 0.85p as the de-escalation tempered the geopolitical risk premium that had driven Monday’s sharp rally. On the supply side, Norwegian production recovered a further 10mcm/d as the impact of recent maintenance continues to ease, with flows towards the Continent up 5mcm/d, adding modest downward pressure. In oil markets, front-month Brent is down $1.72 at $92.53/bbl, extending Monday’s late-session retreat as markets digest the prospect of a more sustained pause in the conflict.
