Gas Market
The near curve for the NBP continued to ease gradually on Wednesday morning but losses were recovered late in the afternoon after Donald Trump’s remarks to the G7 in France. The U.S. President temporarily undermined confidence in the agreement with his remarks that they would continue to hit Iran hard if they did not adhere to the agreement. The July contract had traded down to 96.79p per therm but after a late recovery settled at 99.78p posting a marginal increase of 0.38p for the day. The Winter-26 contract followed a similar fate and closed at 105.57p having traded down to 103.25p. Prompt prices responded to the comfortable gas system as demand remained subdued at 145mcm and there were no supply issues. The Spot and Day ahead products ended the session over 2.00p lower.
Power Market
The front month for the GB baseload curve, July, tracked the near curve of the NBP yesterday and settled £0.40/MWh higher. Remaining contracts were assessed lower over the day due to poor liquidity in the afternoon. Baseload for the Day ahead increased by 3.0% or £3.06/MWh due to lower forecasts for wind generation on Thursday. Wind generation could fall by as much as 33.3% to around 5.5GW, however generation from solar photovoltaic is forecast at 5.8GW.
Carbon prices eased on Thursday with European Allowances falling by 0.1% or 10 cent per tonne on average. The decline in prices last week was largely due to a selloff by investment funds and data this week shows funds have trimmed hedged positions by 4.3Mt or 8.7%, down from 49.2MT in the previous week.
Oil Market
Comments from the U.S. President to the G7 in France halted Brent’s losing streak yesterday. Donald Trump cast doubt on the peace deal with Iran after implying the agreement was not final and they would hit Iran again if they did not comply with the terms. The August contract for the global benchmark traded to a low of $77.75 a barrel yesterday before going on to settle at $79.55 preventing a five-day run of losses. The memorandum of understanding also calls for an end to hostilities between Israel and Lebanon but there were reports of fresh air strikes in parts of southern Lebanon yesterday. Supplies continue to dwindle with the Energy Information Administration in the U.S. reporting a decline in crude oil stocks for the 10th week running and taking reserves to the lowest levels in 40 years. The new Chair for the Federal Reserve, Kevin Warsh, kept U.S. interest rates stable yesterday, any increase to the rates could temper demand for oil.
Markets this morning
The gas and oil markets have eased this morning after reports that President Trump and Iran’s Masoud Pezeshkian have signed a deal to end the war. As part of the memorandum of understanding the Strait of Hormuz is to open immediately, all hostilities to stop and also included is a $300bn plan for Iran’s reconstruction while the nuclear question is to be dealt with over the next 60 days. The official signing ceremony is still to take place in Switzerland on Friday. Brent for August delivery last traded at $77.94 a barrel down $1.61 on last night’s close. In the gas market, July for the NBP is down 3.48p per therm to 96.30p while the winter contract has declined by almost 3.00p to 102.65p. Carbon prices have traded flat this morning.
