A tight GB gas system along with increased geopolitical risk provided the upside to gas prices on Thursday

Gas Market  

The volatility in the energy markets continued on Friday with the U.S. sanctions on Gazprombank providing uncertainty while forecasts for temperatures to rise over the weekend provided downward pressure to the prompt.  The Spot and Day ahead contracts shed 4.75p and 6.70p per therm respectively on the day. The loss for the Day ahead product on Friday wiped out most of the gains for the week.  Similarly for the front of the curve, December eased by 3.91p day-on-day but leaving the front month down 0.48p over the last five-days. Reports that Azerbaijan was to start a pilot contract to supply gas to Slovakia also added to the downside in European gas prices on the day. LNG deliveries are expected at UK and Dutch ports this week however, maintenance works at St Fergus will reduce Norwegian imports to the UK by 5mcm until 07-December.  

Power Market

The increase in forecasts for wind generation along with higher temperatures sent prompt prices spiralling on Friday.  Baseload for the Day ahead hit an eight-week low settling at £66.00/MWh for Monday while the weekend contract settled at £64.80/MWh.  On the curve, the front month declined by £2.75/MWh to settled at £95.50/MWh, which brought the movement for the week into negative territory. Carbon EUAs retreated off their 12-week highs as the Spot price settled at €69.09 per tonne. EUA contracts out to 2026 were 2.0% down on the day or an average of €1.52 per tonne. UKAs were down by an average of £0.50 per tonne.

Oil Market

Crude oil prices increased on Friday with Russia escalating the conflict by bringing it to a new level with the use of longer-range missiles in strikes on Ukraine. A strong dollar limited the upside on the day as Brent settled 94 cents a barrel higher at $75.17 a barrel. Fridays gain for the global benchmark brought the increase for the week to $4.13 a barrel and puts the price above the 50-day average for the first time in two-weeks.  Early results for November show China’s crude oil imports may be up for the first time in 6-months as the world’s second largest oil consumer is believed to have increased imports while taking advantage of the lower prices.  

Markets this morning

Russia continued to increase its missile strikes on Ukraine over the weekend which has added some volatility to the energy markets this morning.  NBP prompt and near curve gas futures have edged higher through the morning session with December last trading at 119.75p per therm.  The Day ahead is 3.25p higher which is a response to the gains at the front of the curve as wind forecasts are strong.  GB gas demand is down at 230mcm this morning and the system is showing a surplus of 25mcm.  Carbon prices have reacted to the uptick in natural gas futures and EUAs for Dec-25 are around 40 cent per tonne higher. Crude oil prices have eased slightly with the January contract for Brent down 28 cents a barrel.