Brent settled at a four year low yesterday following reports of Trump Putin call

Gas Market

With reports of Russian overnight attacks on Ukrainian energy infrastructure the gas markets opened firmer on Thursday. It was one of the most extensive attacks launched by Russia this year targeting Ukraine’s gas production facilities in Kyiv. The front month for the NBP opened just shy of a penny higher but climbed to 82.95p before settling at 82.13p, with a gain of 1.41p day-on-day. Further out the Summer-26 contract was also buoyed by rising geopolitical tensions whilst a slowdown in reinjection of storage gas in Europe also added to concerns. Storage levels in the block stand at 83% of capacity compared to 95% fullness for this time last year and supplies could be vulnerable if there’s a testing winter ahead.  Prompt prices also ended the day higher, the Day ahead product closed almost a penny up as wind generation is forecast to remain subdued and likely to keep gas demand propped up.

Power Market

The rebound in gas futures on the NBP after the Russian bombardment of Ukraine overnight fed into GB power prices yesterday.  Near months on the curve added £1.54/MWh on average whilst contracts covering next summer were marked just £0.25/MWh higher. A bullish run in carbon prices also added to the upside on the baseload curve yesterday. Strong buying ahead of yesterday’s auction returned prices back to recent highs as the Spot settled at €79.04/ tonne. While wind forecasts remain subdued for Friday, the weekend should see generation top 9.0GW. Recent levels of wind generation have been below 2.0GW which has supported the prompt. Baseload for the day ahead bucked the trend yesterday and eased by £3.50/MWh on the improved forecasts heading into the weekend.

Oil Market

Early gains to crude oil prices were pared back over the day and prices fell further late in the session following reports that the U.S. President was in contact with his Russian counterpart. The Ukrainian President is to meet with Donald Trump on Friday and it is believed they were to discuss the possibility of the U.S. providing Tomahawk missiles which would allow Ukraine to strike longer range targets in Russia. However, Trump said late yesterday that his call with Putin went well and both sides will scramble teams to commence talks next week. It’s not clear yet whether representatives from Ukraine will attend. Yesterday’s fall in price saw Brent notch up its third successive day of declines as the global benchmark settled 85 cents lower at $61.06 a barrel, its lowest settlement since March-2021.

Markets this morning

The energy markets have opened lower this morning following the news that Donald Trump had recommenced a dialogue with his Russian counterpart. The possibility of the U.S. providing the longer ranged Tomahawk missiles to Ukraine seems to have brought Russia back to the table with talks between Russian and U.S. representatives set to commence next week. Brent has continued to edge lower with latest trades going through at $60.64 a barrel, a fall of 64 cents this morning. In the gas markets, the NBP curve has softened too with the front month showing a penny per therm discount to last nights close while contracts past this are around 0.75p lower.