Gas Market
Volatile remained the most fitting word to describe the NBP gas market on Tuesday. Following Monday’s gains, gas prices pushed higher again during the morning session, reaching a peak of 121.13p/th. However, prices began to ease off just after midday. The decline was far from straightforward, as the Dec-24 contract dipped to an intraday low of 115.13p/th before rebounding above 118p/th and eventually settling at 118.29p/th. After settlement, though, the contract slipped again, last trading at 116.83p/th just before 5pm. The considerable intraday range of 6p/th on the front-month contract was mirrored on the Q1-25 contract, which saw a 5.78p/th spread, trading between a high of 123.04p and a low of 117.26p. Despite the choppiness, the decline was a welcome development. Rumours that a ceasefire between Isreal and Hezbollah was close was the likely driver for the price decline
Power Market
GB Baseload futures declined on Tuesday, tracking losses on the NBP gas market. Further pressure came from a 1.6% drop in UKA contracts. Rumours of a potential ceasefire agreement between Israel and Hezbollah added to the downward trend on energy commodities. As a result, the front-month baseload power contract fell by 2.4%, settling at £94.70/MWh. The weakness extended across the curve, with all traded contracts through to 2027 also declining.
Carbon prices continued to closely follow European gas trends, with Tuesday’s gas price drop being a major factor driving EUAs lower alongside. Additional downward pressure came from above seasonal norm temperatures across Europe and forecasts for rising wind generation.
Oil Market
Crude oil prices rebounded initially on Tuesday after Monday’s decline, buoyed by concerns over potential tariffs and OPEC+ production dynamics. Overnight, President-elect Trump reaffirmed his plan to impose trade tariffs on all goods imported from Mexico, Canada, and China. This raised concerns for Canada’s oil exports, which amount to 4 million bpd, with most destined for the U.S. Further support came from news that OPEC+ members Iraq, Saudi Arabia, and Russia emphasized the importance of maintaining stable oil markets and prices. Iraq’s announcement of the meeting was interpreted by markets as a signal that OPEC might refrain from increasing production in January, contrary to earlier plans. Brent eased late in the session with rumours that Israel was close to accepting the latest ceasefire terms brokered by the U.S. and France which left Brent to settle lower at $72.81 a barrel.
Markets this morning
The positive developments in the Middle East in relation to a possible ceasefire is continuing to influence the UK gas market. The ceasefire appears to have been accepted overnight and events this morning are indicating it is in effect. The front month is currently trading at 116.10p/th, a 1.85% decline on Tuesday’s settlement. As a result of the declining gas markets, EUA markets are also moving lower with the Dec-24 contract last trading at €68.03/tonne. Crude oil markets are marginally higher as the market fully assesses the ceasefire but is also wary of the upcoming OPEC+ meeting this weekend where a delay to production increases is expected to be confirmed.
27 November 2024
