Colder Weather and Low Wind Lift NBP Gas and BG Baseload Power as Oil Slips on Oversupply Concerns

Gas Market

NBP gas futures extended gains on Tuesday as forecasts for lower wind generation lifted demand from gas-fired power plants, even as overall fundamentals remained relatively stable. The gas balance stayed loose, supported by steady LNG send-out and pipeline flows, with UK send-out nominated at 54mcm/d. Weaker wind output expected through the rest of the week continued to support prompt prices, with the day-ahead contract climbing 3.90p to 78.60p/therm. Further along the curve, the front-month NBP rose 2.77p to settle at 85.03p/therm, while Summer-26 increased 1.63p to 77.21p/therm, tracking prompt strength and firmer carbon prices. Net injections lifted European gas storage levels back above 83% for the first time since mid-October, supported by a steady stream of LNG vessel arrivals into Northwest Europe boosting supply.

Power Market

GB Baseload futures tracked gas prices higher on Tuesday as colder weather and low wind generation maintained bullish momentum. The front-month December contract rose £3.25 to settle at £85.45/MWh, while gains on the prompt were sharper, with the day-ahead jumping £17.85 (29.5%) to £78.30/MWh amid forecasts for very low wind output of around 2.5GW over the weekend, boosting expectations for gas-fired power demand. EU carbon prices steadied following Monday’s sharp rally as traders adjusted to levels above €80.00 and equity markets softened after warnings of an overheated stock market. The Dec-25 EUA added a further 72c to close at €82.25/tonne.

Oil Market 

Oil prices slipped on Tuesday as renewed concerns over a growing supply glut and a stronger US dollar weighed on sentiment. The latest EIA estimates indicate that continued growth in global output is adding to a surplus and putting further downward pressure on prices, with Brent averaging $69.26/bbl so far this year, compared with $82.68 in 2024. The OPEC+ decision to pause output hikes in early 2026 has heightened fears the group is wary of oversupply. The dollar climbed to a four-month high against the euro after Fed Chair Jerome Powell cast doubt on the likelihood of another rate cut this year, making dollar-denominated commodities such as oil more expensive for other currency holders. Meanwhile, TotalEnergies revised its long-term outlook, projecting that oil demand will continue rising until 2040 amid energy security concerns and slow policy progress on the energy transition. Front-month Brent settled 45c lower at $64.44/bbl.

Markets this morning

UK gas and power markets opened lower on Wednesday following Tuesday’s bullish session. Near-curve NBP contracts are down an average of 1.57p/therm, despite higher gas-for-power demand, which rose 24mcm/d to 60mcm/d amid weaker wind generation and the Torness 2 nuclear unit entering maintenance. The UK gas balance remains comfortable, supported by steady LNG send-out and expectations of increased arrivals next week, with two cargoes due into the UK and six more scheduled for Europe. Oil prices were little changed as weaker economic data and a stronger US dollar limited gains, while lower US product stocks offered some support. Brent crude last traded at $64.88/bbl, down 44c.