Gas and oil prices fell yesterday on news of a potential ceasefire between Hezbollah and Israel.

Gas Market

A modest level of risk premium was removed from the NBP curve on Tuesday on news of potential ceasefire talks between Hezbollah and Israel. Although uncertainty surrounding geopolitical risk remains rife, the front month contract posted a day-on-day loss of 3.72p to end the session at 97.14p per therm, while Q1 25 fell by 3.13p to close at 101.75p per therm. Increased Norwegian imports via the Langeled pipeline, along with reduced exports via the Interconnector ensured the GB system was well supplied throughout the day, with Within day shedding 4.00p to close at 94.05p per therm. National Grid said yesterday in its Winter Outlook that it expects a similar level of winter demand year on year, with increases in household demand and exports to Ireland more than offset by reductions in gas-fired power demand and lower exports to continental Europe.  

Power Market

Weakness exhibited across the NBP on Tuesday fed into losses along the GB Baseload curve. The front month contract shed £2.25/MWh to settle at £83.75/MWh, while Q1 25 closed at £87.43/MWh having declined by £2.33/MWh. The Day ahead contract posted a loss of 9.59% as forecasts of strong winds are expected to offset increased demand from lower temperatures. Wind power production for the rest of the week and next week is expected to be above average. European carbon prices were in decline on Tuesday, driven by losses across the wider energy complex. The Spot EUA contract closed at its lowest level since April, dropping by €4.85 to end the session at €59.80 a tonne.  

Oil Market

Crude oil prices shed over 4.00% on Tuesday on news of a possible ceasefire between Hezbollah and Israel. Front month Brent declined by $3.75 to end the session at $77.18 a barrel, having spent the majority of the day below the $80.00 mark. The market will remain sensitive to news headlines that emerge surrounding the conflict in the Middle East until there is more clarity on what Israel will do next or if a ceasefire becomes a reality. While risk to Iranian oil infrastructure still exists, demand uncertainties and forecasted oversupply will continue to mitigate gains while actual supply disruptions have yet to materialise. WTI for November delivery shed $3.57 to end the day at $73.57 a barrel.  

Markets this morning

Yesterday’s losses are again continuing into this morning’s session, with November-24 last going through at 96.86p per therm, 0.28p below the previous close. Although Within day has yet to get going, the Day ahead contract is also trading below yesterday’s close, having last gone through at 94.00p per therm. The GB system is long once again, with stable pipeline supplies from Norway feeding into the system length. Brent has edged up slightly this morning as crude oil markets remain wary of potential Israeli attacks on Iranian oil infrastructure despite yesterday’s reports of a potential ceasefire. Front month Brent last traded at $77.65, up 65 cents on yesterday’s close.