NBP futures ticked up on Wednesday amid more uncertainty in the markets

Gas Market

Uncertainty returned to the gas markets yesterday spurring on late buying activity which boosted natural gas futures on the NBP curve.  Crude oil prices were lifted by the escalation of the Israeli offensive on Gaza as 60,000 reservists were called in ahead of the ground operations. The U.S. Administration seems to be pulling back from commitments made in the peace talks following reports that the President would not attend a proposed meeting between Putin and Zelensky while also rowing back on military funding should the peace deal be struck. The front month peaked over 3.00p per therm above Tuesday’s close before settling at 79.04p with a day-on-day gain of 2.22p which was around a half a penny above the average gain for the day. Prompt prices were buoyed by short gas system yesterday while supplies could be curbed by scheduled works at many Norwegian plants next week.

Power Market

The gains witnessed on the NBP curve fed into the GB baseload curve yesterday. Higher carbon also added support on the day as the front month, September, settled £1.95/MWh higher at £74.95/MWh. The Winter-25 contract was up by the same amount to close at £82.48/MWh.  Carbon EUAs traded heavily early on which boosted prices before a reversal in the afternoon left prices around 20 cent per tonne higher on average. Baseload for the day ahead increased by 3.6% or £2.75/MWh yesterday with uncertainty around wind generation driving the increase.  Hurricane Erin is tracking north up the East coast of the U.S. and could make its way across the Atlantic next week.

Oil Market

After Tuesday’s decline, crude oil prices rebounded yesterday as negotiations for peace in Ukraine oscillate between the two sides while Israel prepared for a ground offensive in Gaza. The optimism witnessed earlier in the week was dulled yesterday by what appeared to be row-backs from the U.S. administration. With Trump originally committing to a trilateral meeting but then saying he would not attend a proposed meeting between Presidents Putin and Zelensky and later posting that Putin may not want to make a deal. Prices also received a boost from the weekly inventory report from the Energy Information Administration which showed a greater than expected draw on U.S. crude oil reserves.  Stocks of crude were down by 6 million barrels compared to an expected 1.8m barrels. At the close, Brent for October was up $1.05 to $66.84 a barrel.

Markets This Morning

The Ukrainian President has called for a strong reaction from the U.S. Administration should the Russian head of State not be inclined to have a bilateral meeting with him. The developments over the last day or so show how difficult it will be to get both sites in the same room never mind reaching a permanent peace deal. The markets’ optimistic view for a potential peace deal is turning gloomy and gas prices have continued to rise this morning.  September last traded 1.34p per therm higher at 80.38p while the Winter is around a penny up. Crude oil prices have also made early gains with Brent adding 44 cents to bring the October price to $67.28 a barrel.