Energy markets corrected lower on Thursday as reports of renewed US-Iran diplomatic contact briefly eased the war premium that has driven prices to multi-year highs, only for that relief to unwind this morning on fresh escalation headlines. Gas and power both gave back part of Wednesday’s gains while crude held above $114/bbl, leaving the complex firmer on the week and the front of the forward curve carrying a substantial premium over the outer years.
Natural Gas
Prompt gas eased because the geopolitical premium thinned, not because supply improved. UK NBP day-ahead settled 8.23p lower at 241.77 p/therm and November 26 shed 7.08p to 241.65 p/therm, while Dutch TTF day-ahead fell €2.40 to just under €100/MWh. Reports of renewed US-Iran outreach provided the trigger, but the physical risk is unchanged: Iran reported three commercial tankers striking sea mines in the Strait of Hormuz, the UKMTO confirmed a separate vessel fire, and LNG flows through the strait are running at roughly a quarter of pre-war levels. Norwegian supply remains constrained, with Gassco output at 336.1 mcm/day on Thursday, Kårstø reduced by around 12 mcm/day today and Nyhamna curtailed by 19.8 mcm/day until 26 November. UK storage is the weak point at roughly 37 per cent full against EU stocks of 74.89 per cent, and with National Gas forecasting demand of 195-207 mcm/day for the rest of the week, UK LNG sendout at 17 mcm/day and forecasters putting a 70 per cent probability on a record-early stratospheric warming event in November, the market is giving little ground - NBP is already bid back above 252p/therm this morning.
Electricity
Power followed gas lower but faces a tightening set of fundamentals. UK day-ahead baseload settled £10.80 down at £202.20/MWh and the forward curve softened across the board, with November 26 at £194.66/MWh and Cal 27 easing 1.2 per cent to £147.19/MWh. The generation mix explains the level: CCGT is supplying around 17.8 GW of roughly 34 GW of demand, renewables 10.4 GW, nuclear 5.1 GW, and there is no coal in the stack. A blocked high-pressure ridge has UK wind forecast to average only 2.5-5.6 GW across the weekend and to stay below seasonal norms into early November, while four reactors at Heysham and Hartlepool are on planned or unplanned outages. Continental prices corrected harder, with German day-ahead down €41.50 to €273.50/MWh and France down €27.05 to €242.95/MWh, but French November nuclear unavailability has been revised up by 1.4 GW to an average of 15.1 GW, and the IFA interconnector remains capped at 500 MW in each direction until 13 November, removing import cover the UK typically leans on for evening peaks.
Other Commodities
Crude is on track for a fourth consecutive monthly gain, with Brent M+1 settling 44 cents lower at $114.88/bbl and WTI at $102.00/bbl before Brent pushed back above $115/bbl this morning on reports of strike options being briefed to the US President. Coal was the one market to cheapen, ARA CIF Cal 27 falling $2.61 to $143.23/tonne and the curve down around 2.6 per cent on the week. Carbon firmed in both schemes: the EUA Dec 26 contract added 10 cents to €89.20/tonne, up some 3.1 per cent week-on-week, while UK ETS Dec 26 gained 18 pence to £65.95/tonne, equivalent to €78.91/tonne and leaving the UK allowance at a discount of around €10.30/tonne to its European counterpart. In global gas, JKM was unchanged at $32.35/MMBtu against a north-west European marker of $27.50/MMBtu, a spread that continues to pull flexible cargo towards Asia, while Henry Hub spot slipped 18 cents to $2.68/MMBtu. Sterling firmed to 1.3375 against the dollar and 1.1965 against the euro, offering a modest offset to dollar-denominated fuel costs.