Energy Markets Volatile Ahead of Trump Ceasefire Deadline

Market Update:

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• The posturing continues from both sides, with Trump's ceasefire deadline due to end in the early hours on Wednesday morning GMT.
• Attacks still continue by Israel & Iran, while Tehran refuses to reopen the Strait of Hormuz and accept a ceasefire.
• But in what could be a sign of progress, the Iranian ambassador to Pakistan said, "positive and productive endeavours" by Islamabad to mediate an end to the war were "approaching a critical, sensitive stage."
• On Monday, Trump said "the entire country can be taken out in one night, and that night might be tomorrow night." He vowed to destroy Iranian power plants and infrastructure if Tehran refused to agree before the deadline.

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NATURAL GAS:
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European gas prices gapped up this morning upon open after the long bank holiday weekend. Markets took early direction from the geopolitical news surrounding the US and Iran conflict that was much publicised this weekend.

The May-26 contract pushed back up towards 130p/T, with TTF rising to €50.50/MWh.

Today marks the day in which the US President Trump has called upon Iran to act and reopen the Strait of Hormuz before targeting power facilities and this marked an escalation to the conflict leading to prices to increase on the back of more risk presenting to the global supply picture.

At time of writing the market has fallen lower, with prices on the NBP moving below 125p/T and TTF May-26 has dropped to €49.00/MWh, highlighting the weaker sentiment since opening.

Temperatures are largely above seasonal average across North Western Europe with the UK, France and the Netherlands all mild with temperatures 4/5°C above the average range. Germany is closer to seasonal today. Temperatures will cool down at the back of the week falling below average.

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ELECTRICITY:
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A largely quiet weekend across the commodity markets from a fundamental perspective, with geopolitics continuing to dominate the main drivers of the market.

Power prices are lower this morning in comparison to the close on Thursday. Storm Dave brought strong wind generation and renewable capacity to the UK during a period of weaker demand due to the public holiday, reducing prompt prices and helping to keep the grid in balance as industry ramped down to celebrate Easter.

Wind generation is below seasonal in Germany today, bring increased demand to gas and other fuels to offset the fuel mix. Wind will increase slightly before the end of the week across Germany but the biggest increase in availability will come next week as wind looks set to pick up from Monday onwards.

The UK baseload May-26 contract is trading at £94/MWh, with Germany trading at €83.50. Both contracts lower than where they were trading ahead of the Easter break.

Oil prices had risen this morning ahead of the deadline set by US President Trump for Iran to open the Strait of Hormuz. Brent Crude had climbed to $111/bbl with Trump threatening to take out Iran in one night if it failed to agree a deal with the US before 8pm US.

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