Energy Prices Ease as Middle East Peace Deal Hopes Improve

Market Update:

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• Wholesale prices fell yesterday on the back of hopes of the prospects for a Middle East peace deal succeeding.
• While gas saw Win-26 drop over 6.5% by close, it had been as low as 12%. Levels that remained elevated overall.
• Oil prices dropped to around $97.7/bbl, but have since moved to $101/bbl. Though down from $114 on Monday.
• Iran stated they were reviewing a US peace proposal. However, the key points around the Strait of Hormuz and the Iranian nuclear program remain unresolved.
• Trump talks about a “swift end” to the war as Iran reviews US peace proposal.
• Iran stated they were reviewing a US peace proposal. However, the key points around the Strait of Hormuz and the Iranian nuclear program remain unresolved
• A Pakistani source and another source briefed on the mediation said an agreement was close on a one-page memorandum that would formally end the conflict.
• That would kick off discussions to unblock shipping through the Strait, lift U.S. sanctions on Iran and set curbs on Iran's nuclear programme, the sources said.
• A separate senior Pakistani official involved in the talks told Reuters on Thursday that negotiators were hopeful of reaching a deal but noted gaps between the sides remained.

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NATURAL GAS:
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European gas prices have opened up lower than the previous session. The NBP front month contract is pricing at 106.80p/th at time of writing, down 2.80p/th day on day. The equivalent TTF front month contract is pricing at €43.45/MWh, down €0.35/MWh. Improving peace prospects in the Middle East have driven prices lower in recent sessions. Reports out yesterday suggest the U.S. and Iran are close to agreeing on a one-page memo to end the war. Some losses have been retraced on the news that Iran have set up a website introducing a new ‘Persian Gulf Strait Authority’ designed to collect tolls from vessels transiting through the Strait of Hormuz. Away from the Middle East, colder weather this week and seen reduced injections into storage across Europe and we’ve some withdrawals seen in the UK. EU storages are currently at 34% fullness, the lowest level we have seen at this point in the summer over the last 5 years.

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ELECTRICITY:
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The UK power market is roughly in line with the previous session at time of writing this morning. The UK Baseload front month contract is pricing at 91.75/MWh, down just 0.25/MWh day on day. Oil prices are down roughly 7% against this point in time yesterday, following similar prices moves in the gas markets and softening on the bearish developments in the Middle East. Carbon prices are holding onto to recent gains with increase demand on compliance buying and hedge funds increasing their long positions. The market has also lifted on expectations that the ETS changes set to come in July, will not be as drastic as first thought. Dec-26 EUA’s are currently trading at €75.82/t CO2e. Low wind generation and increasing demand of the back of the cooler weather has restricted losses in the power markets this week.

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Latest Price:
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Latest Gas & Power Annual Chart:
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