NBP Gas Prices Ease as Higher Storage and Strong Wind Offset Geopolitical Risk

Gas Market

NBP gas prices eased on Thursday as risk premiums from Russia’s drone incursion into Poland faded and European storage levels continued to climb, reaching 79.87% full. The front month fell 1.87p to 79.22p/therm, while the Day-ahead dropped 2.54% to 78.6p/therm amid stronger wind generation. Norwegian flows remained steady despite ongoing maintenance, while UK LNG supply stayed muted with no new cargoes scheduled in the near term. Losses were capped by reports that the EU remains committed to phasing out Russian oil and gas imports by 2028, with short-term contracts set to be banned from next year and speculation of new sanctions targeting TurkStream pipeline flows to accelerate the phase-out.

Power Market

GB baseload forward prices fell in line with the gas market, with the front month down 2.08% at £74.30/MWh. Strong wind generation also weighed on the prompt, pushing the Day-ahead contract 10.46% lower to £41.50/MWh. EU carbon prices eased after a €5 rally over the previous eight sessions, before dropping more sharply on reports that Germany is seeking to slow the reduction of free allocations despite CBAM-related cutbacks due in 2026. Free allocation refers to the system where certain energy intensive industries receive a portion of their EU ETS allowances at no cost to protect international competitiveness. The benchmark Dec-25 contract settled €1.87 lower, or 2.42%, at €75.38/tonne.

Oil Market

Oil prices retreated on Thursday, with Brent crude settling nearly 2% lower as oversupply concerns outweighed geopolitical risks. Front-month Brent fell $1.12, or 1.7%, to close at $66.37/bbl. The IEA’s monthly report noted that global supply is set to rise faster than anticipated this year on the back of planned OPEC+ increases. Saudi Arabia’s exports to China are also expected to climb to 1.65mn bpd in October, up sharply from 1.43mn bpd in September. In Brussels, the US and EU discussed further measures to limit Russian energy trade which could further tighten the global supply outlook. Meanwhile in the US, inflation reached a seven-month high. The data heightened expectations of a Fed rate cut next Wednesday, which could provide some support for economic growth and oil demand.

Markets this morning

NBP gas markets opened quietly, with the front month up just 0.2p at 79.42p/therm. The Day-ahead eased 0.35p/therm as a 5 mcm rise in overall demand was offset by a 4 mcm drop in gas-for-power demand due to stronger wind output. With storage levels high and a number of LNG arrivals due in to Europe the near-term outlook remains bearish. On the policy front, EU Energy Commissioner Dan Jørgensen reaffirmed that the bloc will phase out Russian oil and gas imports by 2028, moving to enshrine the ban into law. Oil markets were steady, with oversupply and weak U.S. demand concerns balanced by ongoing supply risks from the conflicts in the Middle East and Ukraine.