Gas Market
NBP prices fell sharply on Monday morning following news that the U.S. would postpone military strikes against Iranian power plants and energy infrastructure after two days of constructive talks. In an initial knee-jerk reaction to a social media statement by Donald Trump, the front-month contract dropped by 26.68p from its intra-day high, before partially recovering as markets reassessed the ambiguity of the president’s remarks and Iranian authorities rejected the notion that talks had even occurred. By the close, the front month contract had shed 7.83p to settle at 143.27p per therm, with continued attacks on U.S. and Israeli targets highlighting the fragility of the energy outlook despite the fresh hopes of near peace. Strong winds expected over the coming days weighed on the prompt market, although temperatures are expected to fall later in the week, which likely pared losses. The Day ahead contract shed 8.50p to close out the session at 138.50p per therm.
Power Market
The strong weakness exhibited by the NBP near curve on Monday filtered into losses across GB Baseload near months. The front month contract fell by £3.00/MWh to settle at £103.50/MWh, while the Summer 26 contract shed £1.22/MWh to end the session at £104.53/MWh. High wind output forecast from today, as well as the bearish influence of the near curve, weighed on the prompt market. The Day ahead contract shed a massive 42.04% day-on-day to settle at £71.29/MWh.
European carbon prices opened lower on Monday but reversed course by late morning, moving sharply against the trend seen in gas and oil markets. Dec 26 European Allowances increased by €1.65 to settle at €69.27 a tonne, while UK Allowances for Dec 26 posted a £1.22 day-on-day to close at £38.08 a tonne.
Oil Market
Oil prices fell on Monday following the postponement of military strikes on Iranian energy infrastructure by the U.S. Donald Trump had warned over the weekend that Iranian power plants would be destroyed if Tehran failed to fully open the Strait of Hormuz to all shipping within 48 hours, a threat that supported oil prices at the open. However, following a social media post released on Monday morning by the U.S. President that suggested talks had been progressing and further strikes would be postponed for 5 days, oil prices declined. The front month contract reached an intra-day low of $96.00 a barrel. However, some of the initial losses were pared back after Iran suggested that no such talks were underway with the U.S. and launched fresh attacked on Israel and other sites in the Middle East. Brent for May 26 delivery settled at $99.94 a barrel, down $12.25 from the previous day’s record-high close.
Markets this morning
NBP prices have extended yesterday’s losses so far this morning despite ongoing geopolitical unrest in the Middle East. While strikes between Iran and Israel continued overnight and the Strait of Hormuz remains closed, the possibility that an agreement could be reached between the U.S. and Iran over the next 5 days renewed hopes that the end of the conflict could be in sight. The front month contract last went through at 135.19p per therm, down 8.08p on its previous close. Meanwhile, crude oil markets have risen back up above the $100 a barrel mark, but have fallen back from earlier highs. The front month Brent contract last went through at $101.15 a barrel, up $1.21 on Monday’s settlement.
