Gas Market
UK NBP gas rose on Friday, with near curve contracts leading the gains. The market continues to assign minimal probability of LNG supply disruption from the Middle East extending into winter, but sees an increased risk of disruption persisting through the rest of summer. The UK gas NBP front month Aug-26 contract led gains, up 3.13p on the day to 107.64p/therm, a rise of 9.84p over the week. Q1-27 rose a more subdued 1.76p on the day to 109.61p/therm. The narrow gap between summer and winter prices is making it less profitable for suppliers to buy gas now, store it, and sell it later in winter, weakening one of the usual drivers of summer storage injections. EU gas storage currently sits 10.25% below last year’s level at 50% full. At the same time, hot weather in Asia is pushing up demand and prices there, drawing LNG cargoes away from Europe. Prompt contracts climbed ahead of a forecast surge in temperatures, with most of western Europe expected well above normal next week. British wind generation is set to fall below normal next week, tightening supply and driving higher gas burn for cooling demand. The day ahead contract rose 1.5p, or 1.42%, to 107.05p/therm
Power Market
GB Baseload contracts climbed higher on Friday, lifted by gains in UK gas The front month Aug-26 contract rose £1.75 on the day, settling £7.25 over the course of the week to £96.5/MWh. UK Nuclear output averaged 2.9GW last month, down from 4.4GW a year earlier and the lowest for the month on record due to multiple units at Sizewell, Hartlepool and Heysham offline due to maintenance. Higher temperatures in Europe are expected to increase cooling demand over the next two weeks, driving higher demand and providing support to near curve contracts.
Dec-26 EUAs were somewhat higher than preceding days on Friday July 3. Dec-26 EUAs opened on a firm footing, with early buying lifting prices to €80. The front-December contract settled at €80.60, up 1.5% on the day and 0.4% on the week. Trading volumes were relatively thin as traders remain cautious ahead of the European Commission’s ETS Review proposal scheduled for July 17th.
Oil Market
Prices ended the week little changed as market participants weighed hopes for a U.S.-Iran peace deal. Front-month Brent settled up 32c at $72.12/bbl, although still 48c below last Friday’s close. Trading was thin with U.S. markets shut ahead of the Independence Day holiday. Gulf producers are ramping up output on hopes of shipping more crude. OPEC production rose 3.3 million bpd in June month-on-month, with Kuwait’s output jumping to 1.65 million bpd from 580,000 bpd in May. Adding to the bearish tone, oil for near-term delivery is now trading slightly cheaper than oil for delivery six months out. This is the first time this has happened since October 2025 and before that December 2023. The surge of exports through the reopened Strait of Hormuz has created a temporary glut in the spot market. Near-term oil is currently about 18 cents a barrel cheaper than the six-month contract, a sharp swing from late March, when near-term oil was priced as much as $37 higher due to the intense fighting between the U.S. and Iran.
Markets This Morning
Energy markets are trading lower, with NBP gas contracts giving back part of last week’s gains. The market remains cautious over the potential normalisation of Hormuz traffic, with no major political developments over the weekend. Front month NBP Aug-26 is down 1.01p at 106.63p/therm, while Win-26 is down 1.47p at 109.5p/therm. Brent crude is down 30c after OPEC+ agreed a further increase in output targets from August, adding to global supply just as prices ease on the gradual reopening of the Strait of Hormuz. The group agreed at an online meeting to raise quotas by 188,000 bpd from August, on top of similar increases in June and July. The Dec-26 EUA is trading down 52c at €80.08/tonne as the contract continues to hover around the €80 mark.
