Energy markets ended last week sharply lower as traders unwound the risk premium attached to the US-Iran conflict following the American midterm elections, only for the prompt to reopen firmer this morning on a tighter physical balance. Gas and power both gave up ground into Friday’s close, carbon and coal followed, and crude held broadly flat before softening this morning on de-escalation rhetoric.
Natural Gas
Prices fell through last week on geopolitics rather than fundamentals, with the projected Democratic sweep of Congress read as raising the chances of a diplomatic settlement with Iran and knocking roughly 15 per cent off European gas from its late October highs. NBP day-ahead settled £10.00 lower at 214.00 p/therm on Friday and December 26 lost 12.67 p/therm to 212.25 p/therm, with TTF day-ahead at the equivalent of around €86/MWh. The prompt has firmed this morning, with day-ahead indicated near 218.50 p/therm, as LNG send-out dropped to 54 mcm/day from 70 mcm/day on Friday, unplanned maintenance at Visund curtailed 13.2 mcm/day of Norwegian output, and UK system demand rose 10.54 mcm/day to 262.02 mcm/day on a colder forecast. Norwegian exit nominations stand at 336.6 mcm/day with around 116 mcm/day heading to the UK, and UKCS production is slightly higher at 111.50 mcm/day. European storage near 74 per cent full remains well below the five-year average, and reports of vessels struck by mines in the Strait of Hormuz, alongside the suspension of Iraq’s Khor Mor field after a suspected drone attack, mean the supply risk premium has not disappeared.
Electricity
Power tracked gas lower into Friday’s close but has rebounded more forcefully this morning as the system tightened. The day-ahead baseload settled £6.16/MWh down at £215.00/MWh and the day-ahead peak fell £24.24/MWh to £223.32/MWh on better wind, while December 26 baseload eased £7.34/MWh to £174.00/MWh and Q1 27 lost £7.25/MWh to £172.95/MWh. Today’s day-ahead is being offered near £245/MWh, and the intraday system flipped from a long, cheap overnight position at £102.10/MWh to £339/MWh through the 06:30 to 08:00 ramp, with imbalance volumes reaching 728 MWh short in one period against demand near 39.4 GW. Low wind through the weekend left CCGTs setting the marginal price, and nuclear availability is constrained with roughly 1,076 MW of impact across Heysham 1 and Heysham 2 and Torness 2 due off from 27 November. Interconnector flows are effectively flat and French nuclear output was reported 2.4 GW lower late last week on EDF strike action, so there is little continental support available. Further out the curve held better, with Summer 27 down only £1.26/MWh at £123.05/MWh, and monthly contracts stepping from £179.04/MWh in February to £134.22/MWh by April.
Other Commodities
Crude was flat into the close, with Brent M+1 settling at $98.32/bbl and WTI last assessed near $90.52/bbl, though prices have eased this morning after President Trump said further strikes on Iran were highly unlikely while talks continue. Iraq’s claim of output above 5 million bpd complicates its bid for a larger OPEC quota and could test cartel discipline if pressed. Coal extended its slide, with API2 ARA CIF Cal 27 down $4.58 to $127.63/tonne and the Cal 28 and Cal 29 contracts at $121.22/tonne and $120.61/tonne. Carbon sold off with the complex: the EUA Dec 26 fell €2.40 to €86.55/tonne and the UK ETS Dec 26 dropped £1.83 to £64.75/tonne, leaving the UKA discount just under €9/tonne, while the Dec 27 and Dec 28 EUAs at €92.26/tonne and €95.76/tonne keep the carbon curve sloping upwards. In global LNG, JKM M+1 fell $1.36 to $28.68/MMBtu against TTF spot at $28.30/MMBtu, leaving only a thin Asian pull, and Henry Hub spot held at $2.60/MMBtu with the north-west European arrivals schedule heavily weighted towards US cargoes. Sterling weakened a cent against the dollar to 1.3349 and was unchanged against the euro at 1.1988.