Wholesale gas and electricity prices thankfully dropped back markedly on Tuesday as a result of optimism about Iran and Oman agreeing a deal to open the Strait of Hormuz, along with the Americans saying they have cleared all the mines. It is too early to be certain, but the signs are promising.
As soon as a settlement is reached and gas flows from Qatar, prices will go through the floor.
| Gas: Gas prices fell across the curve yesterday. In the prompt, a slightly overbalanced system saw the grid 13mcm oversupplied. An increase in forecasted wind generation over the next fortnight will limit demand for gas. However, losses were capped due to a tightening of Norwegian supplies as the Nyhamna outage was extended by 10 days. In the curve, the unwinding of geopolitical risk premiums saw prices decline as Pakistan and Oman lead diplomatic efforts with Iran on preventing further escalation. Prices have continued to soften in the open this morning. Power: Power prices fell yesterday, tracking the underlying energy mix and European counterparts. Details of the US sanctions on Iran have appeared less aggressive than the original “economic D-Day” sentiment implied. Initial measures included sanctions against major Chinese financial institutions as China trades oil with Iran. Power has continued to be bearish this morning during the initial market open. Oil: Oil prices fell 3% yesterday as traders saw the sanctions against Iran as less risky than the potential military escalation. Oil prices have continued to slide in the open this morning, falling a further $2/barrel as talks between Iran and Oman revived hopes of reopening the Strait of Hormuz. Carbon (EUAs): The ICE Dec-26 closed at €84.42/t last night. The contract opened this morning at €84.43/t. Carbon (UKAs): The ICE Dec-26 traded to £60.96/t yesterday, opening this morning at £60.92/t. |
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