Energy Markets Rebound as Ceasefire Uncertainty Persists

Market Update:

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• Wholesale prices continued the recent downwards trend on Wednesday.
• Limited trading so far this morning, however, where there has been, it's moved higher.
• Oil dropped on Wednesday, however, today has seen a rise to $104.9/bbl, as Middle East ceasefire prospects are reassessed.
• Despite news to the contrary, it would seem that Iran are reviewing a U.S. ceasefire plan, but no intention of holding talks.
• Trump, on the other hand continues the rhetoric, that Iranian leaders are negotiating, and they badly want to make a deal, but afraid to say it.
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NATURAL GAS:

European gas markets have opened higher this morning as commodity markets continue to be driven by geopolitics and developments in the Middle East, discounting other fundamentals. The NBP front month contract is pricing at 137.40p/th at time of writing. Up 5.85p/th day on day at time of writing. The equivalent TTF front month contract is pricing at €54.55/MWh, up €2.30/MWh day on day.

There continues to be uncertainty in the markets around the progress of peace talks in the Middle East with Trump insisting that Iran do want to achieve a peace agreement overnight despite reports of Iran rejecting a ceasefire proposal. We have also had reports on a media interview with the Ukrainian President on the conflict in Eastern Europe, where he has made clear the US are willing to offer security guarantees if Ukraine cede the Donbas region to Russia.

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The gas fundamentals remain bearish despite a brief upcoming cold spell. The UK system is flat today at open, with total demand at 237mcm at time of writing, 5mcm below seasonal normal. Demand remains below seasonal normal despite temperatures being around 4 degrees below seasonal normal in the UK today. Next week will see some improvement in the forecasts with April generally set to hold above seasonal normal.

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ELECTRICITY:
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European power markets are up in line with gas markets this morning. The UK Baseload front month contract is pricing at £99.50/MWh at time of writing, up £2.00/MWh day on day. The equivalent German Baseload contract is pricing at €91.70/MWh, up €2.70/MWh day on day. Declining temperatures and wind speeds are seeing an increase in demand today, whilst renewable generation is down.

The weathers changes are having an impact on the prompt pricing whilst the geopolitical situation in the Middle East continues to impact the front of the curve. Brent oil is pricing back above $100/bbl after trading comfortably below in earlier sessions this week. Reports suggest Iran has received the US 15 point peace plan and is currently reviewing the proposal. In the carbon market, Dec-26 EUA’s have also traded higher this morning, pricing at €71.75/t CO2e, up €1.00/t CO2e day on day.

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Latest Price:
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Latest Gas & Power Annual Chart:
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