Gas Market
Near NBP months ended the session an average of 2.58p per therm lower yesterday after signs that both the U.S. and Iran had entered the negotiations in Doha. Earlier reports that Iranian officials would not be joining in with the peace talks provided support to the near curve of the NBP and August, the new front month, peaked over 2.00p above Tuesday’s settlement. Reports emerged that Iran would be engaging with the mediators through indirect talks and the geopolitical risk premium added during the morning was slowly eroded. The front month went on to close down at 101.69p while the front season, Winter-26 contract, declined by 2.10p to 106.76p. A long gas system with a surplus of almost 10mcm late in the trading day weighed on the Spot which fell by over 4.00p yesterday while the Day ahead yielded 3.55p with forecasts for robust wind generation likely to curb gas demand for power generation on Thursday.
Power Market
GB baseload futures responded to the declines in gas and carbon yesterday as the August contract settled £1.75/MWh lower at £93.25/MWh. The September contract closed below the August contract at £93.15/MWh, posting a loss of £2.65/MWh. Baseload for the Day ahead tanked yesterday, with forecasts for wind expected to get close to 20.0GW on Thursday while solar photovoltaic generation should top 5.0GW, the two could meet 80.0% of GB’s power needs tomorrow. At the close, the Day ahead settled at £55.80/MWh, down by over 46.0% or £48.26/MWh.
Carbon prices eased on Wednesday with EUA contracts out to Dec-28 declining by an average of 0.68% or 56 cent per tonne. The EU Commission will now present its proposal to revise the EU ETS on July 17, two days later than originally scheduled.
Oil Market
The crude oil markets responded to comments from the U.S. President yesterday after he said talks were going well. Earlier in the session, officials from Iran were saying they would not be attending talks with their U.S counterparts although they did engage with the mediators in Doha. The talks are aimed at finding a lasting ceasefire while also agreeing to a working solution for shipping flows through the Strait of Hormuz. While there were no details of progress made the talks were seen as a positive and crude oil prices eased with Brent settling at $71.57 a barrel, down $1.38 or close to 1.9%. The U.S. benchmark fell by 92 cents a barrel despite a squeeze on crude oil stocks. The Energy Information Administration published its latest report which showed U.S. crude oil reserves had dropped to their lowest levels since September 2018 at 408.4m barrels. Stocks fell by 3.8m barrels in the week to 26-June and currently stand at 7% below the five-year average for U.S. reserves.
Markets this morning
Reports of retaliatory strikes from the U.S. and Iran over the weekend have threatened the fragile ceasefire and the energy markets have opened firmer this morning. Both sides have agreed to stand down attacks this morning, but NBP futures have increased by over 3.00p per therm. It’s the final day of trading for the July contract on the ICE platform and the outgoing front month last exchanged at 101.00p while the August contract is up 3.4% or 3.37p to 101.17p per therm. Prompt prices have also bounced higher this morning with the Day ahead product adding 3.88p to last trade at 102.00p. In the crude oil markets, Brent for August delivery is 0.9% or 65 cents up at $72.64 a barrel.
