Gas Market
UK wholesale gas prices traded lower on Monday, retracing the previous days’ gains, as the market remained cautious over the potential normalisation of Strait of Hormuz traffic. A quiet weekend in terms of political developments helped to curb upside from early in the session, with the front month contract posting a 3.03p discount by the close to settle at 104.61p per therm. Further out, losses were more muted, with the Winter 26 contract shedding 1.95p day-on-day as UK storage injections remained limited. UK storage stocks currently sit at 20.3% full as UK shippers have prioritised exports to the continent over injections in recent weeks. The prompt market also eased lower, despite rising gas-for-power demand levels expected over the coming days amid weakening wind speeds and surging cooling demand. The Day ahead contract declined by 2.29p day-on-day to end the session at 104.76p per therm.
Power Market
The GB baseload curve tracked losses seen across the UK gas markets on Monday as previous gains were retraced on the potential normalisation of Strait of Hormuz traffic. The front month contract declined by £0.90/MWh to settle at £95.60/MWh. In contrast, the prompt market was supported by forecasts for low wind levels and high cooling demand ahead of the impending heatwave headed for northwestern Europe. The Day ahead contract increased by 8.1% to settle at £97.81/MWh.
European carbon prices edged up on Monday as increased buying activity ahead of next week’s publication of EU ETS reform proposals supported prices. Dec 26 European Allowances posted a €1.36 gain to settle at €81.95 a tonne, while its UKA counter-part ended the session at £57.66 a tonne, up £1.06 day-on-day.
Oil Market
Crude oil prices were stable on Monday, with a modest day-on-day decline driven by news that OPEC+ had agreed to increase its output targets for August, while exports from the Strait of Hormuz continued to recover. The Organisation of Petroleum Exporting Countries and their allies (OPEC+) agreed on Sunday to further raise output targets by 188,000 barrels per day from next month, on top of similar increases for June and July, marking a fifth consecutive month of output gains. Reports that the United Arab Emirates raised its crude output to near record highs in June after it quit OPEC to escape production caps added further to the renewed sense of optimism surrounding global supplies following the reopening of the Strait of Hormuz. The front month Brent contract shed 13 cents by the close to settle at $71.99 a barrel, while the West Texas Intermediate (WTI) contract for August delivery posted a 27 cents decline to close out the session at $68.55 a barrel.
Markets this morning
UK wholesale gas prices have opened higher this morning amid reports that Iran attacked two commercial vessels yesterday, including one carrying a Qatari LNG cargo. The increased hostilities coud signal a re-escalation of the conflict despite the ongoing funeral procession of Iran’s Supreme Leader, while a lack of progress on peace talks between the U.S. and Iran is adding to concerns. The front month contract last went through at 108.97p per therm. representing a gain of 4.36p so far. Crude oil prices are also trading in positive territory, albeit to a lesser extent. The Brent contract for August delivery last traded at $73.07 a barrel, up $1.08 from its previous close.
