A rally in carbon EUAs mid-morning provided some upside to NBP futures yesterday

Gas Market

A rally in carbon EUAs mid-morning provided some upside to NBP futures yesterday while geopolitical risk also underpins the curve while the market awaits Israel’s response to the Iranian missile attacks.  The front month, November, settled at its highest point since the end of August yesterday, adding 1.79p per therm to close at 103.68p.  A little further out, the Quarter-1 contract was 1.58p higher at 106.04p.  The unplanned outage at Sleipner is expected to continue until the weekend according to the latest post on Gassco’s website and although the impact to GB supplies is minimal, prompt prices increased on the day. Forecasts for lower wind generation for the next week or so also buoyed the prompt as the balance of month contract settled 2.40p higher.

Power Market

After sharp gains to carbon EUAS and gains to the NBP curve, it was no surprise to see GB baseload futures marked higher at the close.  The November contract settled £2.33/MWh higher at £90.58/MWh which was the largest gain for the power curve yesterday.  Contracts past the front month were generally less than a pound higher at the close.  Baseload for the Day ahead eased yesterday despite forecasts for wind generation to drop below normal levels. A rush to close out short positions for carbon EUAs triggered a sharp rise in prices yesterday. EUA contracts out to 2026 moved over 4.0% higher as the Dec-25 product settled at €66.95 per tonne which was a day-on-day increase of €2.70 per tonne.

Oil Market 

Crude oil prices fell on Wednesday after data showed U.S. crude inventories rose by 5.5 million barrels, exceeding expectation of a 270,000-barrel increase.  Refineries exiting seasonal maintenance, and a rebound of imports delayed due to last week’s hurricane, were the primary drivers of this bump to inventories. Front month Brent for December declined $1.08 to $74.96 a barrel. A stronger dollar also added to the downside in prices on the day as the greenback picked up ahead of the U.S. election. Despite the drop, Brent futures remained up by about 2% this week as traders factored in the continuing conflict in the Middle East. U.S. Secretary of State Anthony Blinken called for de-escalation in the conflict although heavy air strikes on the Lebanese cities of Beirut and Tyre gave little hope for respite.

Markets this morning

The gas markets have opened with sharp increases this morning as the front month is up 3.02p per therm after Turkey’s retaliation following the attacks on its capital Ankara yesterday.  Turkey has targeted the Kurdish militant group the PKK, in Iraq and Syria raising fears of further attacks.  Prompt prices have rallied too with the Day ahead showing an increase of 105.25p while the GB gas system has a healthy surplus of 15mcm for today despite reports of another outage at the Oseberg field.  Crude oil prices have also firmed this morning with Brent for December delivery $1.28 higher at $76.24 a barrel.  In the carbon markets, the Dec-24 contract is up €1.26 per tonne while the Dec-25 contract is flat.