Energy markets sold off hard on Monday as signs of diplomatic progress between Washington and Tehran drained risk premium from gas, power and crude alike, only for reported overnight US strikes on Iran’s Qeshm Island to reverse much of that move this morning. Carbon was the sole gainer on the session, firming to its strongest level in around three years, while UK prompt power held its ground on cold weather and thin renewable output.
Natural Gas
Gas fell because the politics changed, not because the physical balance did. Comments that Iran’s President had authorised negotiators to pursue peace talks, alongside reports that Tehran could guarantee security around the Strait of Hormuz as part of an agreement, were enough to knock NBP day-ahead down 22.00 p/therm to 231.00 p/therm and December-26 down 22.70 p/therm to 234.90 p/therm, falls of roughly nine per cent. The continent moved with it, TTF spot assessed at €94.67/MWh and December-26 down 8.7 per cent at €94.86/MWh, while further-dated UK contracts eased more modestly, Summer-27 to 171.07 p/therm and Winter-27 to 163.34 p/therm. The physical picture remains the counterweight to all of this: LNG send-out has been nominated at 46.1 mcm/day against an October average nearer 8 mcm/day, ten cargoes are due into north-west Europe between 3 and 6 November, and UKCS output has firmed to 98.10 mcm/day. Set against that, Norwegian outages at Oseberg and Asgard have been extended again, removing some 27 mcm/day, and system demand of 217.28 mcm/day is running at the lower end of the 214-239 mcm/day expected this week. European storage is adequate in aggregate but unevenly drawn, and the market has priced that in through an unusually flat summer-2027 curve that keeps refilling expensive.
Electricity
Power divided between a prompt anchored in fundamentals and a curve anchored in gas. Day-ahead baseload was virtually unchanged at £208.17/MWh and the day-ahead peak firmed to £217.71/MWh, supported by below-normal temperatures, wind running slightly under seasonal norms and restricted import cover. Forward contracts told the opposite story, December-26 falling 7.6 per cent to £181.90/MWh, Q1-27 to £186.78/MWh and Cal-27 to £143.14/MWh, which leaves near-dated baseload marginally below the fuel and carbon cost of a 50 per cent efficient CCGT and clean spark spreads in negative territory. The half-hourly data showed where the real stress sits, with Monday’s evening ramp lifting system prices to a peak of £313.00/MWh before a well-supplied overnight period pushed them back to the mid £150s/MWh, then a sharp flip into Tuesday’s morning peak at £267.00/MWh. Import optionality is thinner than usual, with IFA capped at 500 MW in each direction until 13 November and French nuclear outages near 15.1 GW, while continental day-ahead baseload at €252.85/MWh in Germany and €246.37/MWh in France offers nothing cheaper. Domestic nuclear availability also tightened, with Heysham 1-1 beginning a 65-day planned outage today on top of Heysham 2-8 being fully offline, and wind is forecast to halve from around 8 GW to 4 GW later this week.
Other Commodities
Crude bore the brunt, Brent M+1 dropping $12.87, or 10.9 per cent, to $104.77/bbl and WTI falling 7.4 per cent to $96.46/bbl, before firming again overnight on the reported Qeshm Island strikes. Coal eased far less, API2 ARA Cal-27 down $5.42 to $140.04/tonne. Carbon ran the other way: EUA Dec-26 rose €1.33 to €90.52 per tonne, its highest since 2023, with UK ETS Dec-26 up £0.84 to £66.37 per tonne, equivalent to €79.41 and holding a discount of roughly €11 per tonne to the European benchmark, a spread little changed on the day. In global gas, JKM M+1 eased 3.7 per cent to $31.64/MMBtu while north-west European December LNG fell 8.3 per cent to $30.75/MMBtu, compressing the Asian premium to around half a dollar and keeping cargoes pointed at Europe, with Henry Hub spot at $2.54/MMBtu leaving the arbitrage comfortably open. Sterling was little changed at 1.1965 against the euro and 1.3405 against the dollar, so currency made no material contribution.