Gas Market
UK and European gas prices experienced a volatile session yesterday, gaining over 2.00p early in the morning before eventually settling an average of 2.69p/th lower across near-curve contracts. The front-month NBP contract reached an intra-day high of 120.62p/therm, but a late afternoon fall caused the contract to settle 2.92p down at 114.98p per therm. Continuing forecasts of warmer and windier weather are helping to reduce concerns over lower European gas storage levels as the Day-Ahead contract fell to 113.55p/th, down 4.10%. The primary driver of the five-day decline of 20.01p/therm on the NBP March contract remains the ongoing ceasefire talks between the US and Russia. However, any agreement that is reached without the inclusion and acceptance of Ukraine may delay the lifting of European sanctions and the resumption of Russian gas flows. Until news of a lasting agreement is confirmed, market volatility could continue.
Power Market
The resumption of declining gas futures pressured the GB baseload power curve on Wednesday. Prices flip-flopped earlier in the session but by the close, the March contract had yielded £2.75/MWh to settle at £93.18/MWh. The Summer-25 baseload product was assessed at £88.00/MWh, posting a decline of £3.75/MWh. Lower carbon prices added to the downside yesterday afternoon as EUA contracts out to Dec-27 were down by an average of €1.88 per tonne.
Milder temperatures coupled with forecasts for above average wind speeds weighed on the prompt as the Day ahead fell by around 8% to £90.00/MWh yesterday. Wind generation is expected to cover over 50.0% of GB power demand on Thursday, cutting gas fired plants down to just 12.0%.
Oil Market
Front month Brent settled at $76.04 per barrel yesterday, up 20 cents, as oil prices remained near a one-week high amid mixed market influences. A lifting of sanctions on Russian crude oil production following a potential deal brokered by the US is unlikely to significantly impact supply. Russia remains bound by its OPEC+ production target of 9 million barrels per day, rather than by sanctions, which affect the destination of exports rather than their volume. However, tariffs announced by the Trump administration have stronger potential to weigh on oil prices by raising the cost of consumer goods, weakening the global economy and reducing fuel demand. Providing upside to oil prices yesterday was a report that a drone strike on a Russian pumping station may reduce flows by up to 40% on one of it’s major route for crude exports.
Markets this morning
NBP futures have opened lower and continued to tumble this morning as the front month last exchanged 6.10p lower at 118.15p per therm. Contracts that have traded are between 4.50p and 6.20p down from yesterday’s close as the Ukraine President is to meet with the U.S. Vice President to discuss a possible resolution to the war later today at the Munich Security Conference. Crude oil prices have ticked up after President Trump delayed the start of the latest round of tariffs until April which gives some hope that a trade war could be avoided. Brent for April delivery last traded at $75.41 a barrel which is 39 cents up on last night’s close.
20 February 2025
