Gas Market
UK wholesale gas prices moved lower on Wednesday, completing a third straight session of near curve losses. Although tensions in the Middle East were still prevalent, reports that an unofficial framework for a memorandum of understanding between Iran and the U.S. could see the restoration of commercial shipping through the Strait of Hormuz, weighed on prices. The renewed sense of optimism around a peace agreement resulted in the front month contract shedding 2.28p on its penultimate day of trading prior to its expiry, closing at 113.04p per therm. Prompt contracts also eased, driven by weak weather fundamentals as well as increased flows from Norway due to the partial resolution of the outage at Oseberg. The Day ahead contract shed 3.13p to settle at 112.25p per therm, while the Within day contract fell by 5.70p to close out the session at 112.20p per therm.
Power Market
Prices across the GB baseload curve fell on Wednesday, in line with losses seen on the UK wholesale gas market. The front month contract shed £0.15/MWh to settle at £98.75/MWh. Losses further out were more pronounced, with the Winter 26 contract down £1.00/MWh by the close. The prompt market was similarly weak, with the Day ahead contract shedding 4.0% to close out the session at £101.28/MWh.
A surge in buying activity supported European carbon prices on Wednesday, while greater optimism around regulatory and political changes to come provided further upside. Dec 26 European Allowances rose by €0.59 to settle at €78.71 a tonne. Meanwhile, Dec 26 UK Allowances also edged up to settle at £57.43 a tonne.
Oil Market
Crude oil prices traded within a broad range on Wednesday, but remained below the previous session’s close as growing optimism over U.S.-Iran peace talks pressured the market. Reports of an unofficial draft framework for an agreement between the United States and Iran on ending their conflict and reopening the Strait of Hormuz, combined with a rising number of commercial vessels successfully transiting the strait, helped bolster market confidence, despite the recent U.S. military strikes on Iran. The absence of retaliatory action by Tehran added to the belief that both sides are ready to reach an agreement. The front month Brent contract fell by $5.29 day-on-day to settle at $94.29 a barrel, its lowest close in almost 6 weeks. The West Texas Intermediate (WTI) contract for July delivery fell by 5.5% by the close to finish out the session at $88.68 a barrel.
