Energy markets took a breather at the prompt on Wednesday while continuing to price in a larger geopolitical risk premium further out, after two cargo ships were sunk in the Strait of Hormuz amid intensifying Iranian attacks on commercial shipping. Mild UK weather pulled day-ahead gas and power lower, but forward contracts from next spring onwards rose again, and crude held above $106/bbl.
Natural Gas
Prompt gas eased on warmth and a technical unwind rather than any improvement in the physical balance, with NBP day-ahead holding flat at 209.00 p/therm and TTF slipping around 0.4 per cent to €87.13/MWh as Northwest European temperatures ran 3.89°C above seasonal norms. Supply told a different story: an ongoing process problem at Kårstø is curtailing 12.6 mcm/day and a fresh unplanned reduction at Kristin has removed another 5.6 mcm/day, taking Norwegian exit nominations down to around 330 mcm/day, while UKCS output fell to 91 mcm/day and Vesterled and FLAGS deliveries to the UK dropped to zero. UK LNG sendout is steady but thin at roughly 8 mcm/day across Isle of Grain and South Hook, and only two cargoes have berthed at UK terminals since the start of October, nine fewer than the same point last year. Further out the curve firmed, with November 26 at 216.01 p/therm and Summer 27 at 159.70 p/therm now trading above Winter 27 at 152.20 p/therm, an inversion that points to concern about refilling storage: European stocks sit at roughly 74 per cent, around 18 percentage points below the seasonal norm. The attacks in the Strait of Hormuz, through which the US says it has helped move more than 19 million barrels of crude, are the dominant influence on sentiment, and forecasts turning to 1.78°C below normal by 27 October offer little comfort.
Electricity
Power tracked gas lower at the front and higher at the back, with UK day-ahead baseload settling £3.36 down at £149.21/MWh while day-ahead peak rose to £153.42/MWh, leaving an unusually slim peak premium. The intraday shape was far more dramatic than the daily average suggests, running from £25.28/MWh in the solar-heavy late morning to £298/MWh across the late afternoon ramp, with large imbalance volumes at both ends of the day. Forward power split in the same way as gas, with November 26 baseload easing £2.08 to £171.71/MWh and Q1 27 marginally lower at £175.81/MWh, while Summer 27 rose to £124.94/MWh and Winter 27 to £124.59/MWh. Supply-side support is accumulating: two Heysham units are fully off line on planned work with further unplanned derates at Heysham and Hartlepool, Nordic nuclear availability was reported at 51 per cent, and declining continental hydro stocks against a dry southeastern outlook lifted French November baseload to its highest since assessments began in August. Wind is expected to hold steady before easing over the weekend, and with gas and carbon costs absorbing most of the front-month power price, clean spark spreads remain thin for all but the most efficient CCGTs.
Other Commodities
Crude firmed modestly, with Brent M+1 settling $0.37 higher at $106.06/bbl and WTI last assessed at $94.14/bbl, as the sinking of two vessels in the Strait of Hormuz reinforced a substantial chokepoint premium even though cargoes continue to move. Coal eased, with API2 ARA Cal 27 down $0.95 to $143.56/tonne, although the curve remains more than 3 per cent higher on the week. Carbon softened in both schemes, with EUA Dec 26 down €0.91 to €87.14 per tonne and UK ETS Dec 26 down £0.82 to £65.10 per tonne, leaving the UK allowance at roughly €77 per tonne and the UKA discount to EUAs steady at about €10 per tonne. In global gas, JKM M+1 slipped $0.27 to $29.34/MMBtu while Henry Hub spot firmed to $3.22/MMBtu, keeping the Atlantic arbitrage wide and US cargoes dominant in the Northwest European arrival schedule, with Indian buyers reported to be paying delivered prices above $26/MMBtu. Sterling was mixed, easing 0.0061 to 1.3191 against the dollar while firming slightly to 1.1850 against the euro, which adds marginally to the sterling cost of dollar-priced fuels.