Wholesale gas and electricity markets fell markedly again on Tuesday and are moving in the right direction, given the strong indications of peace in the Gulf region. These significant market movements are not what we have become accustomed to and are symptomatic of an unnecessarily inflated market. Our advice remains to stick with one-year contracts, as these prices will not last forever. Prices further out, for summer 2028, winter 2028 and summer 2029, are significantly lower than current levels.
| Gas: Gas prices fell across most contracts yesterday, largely driven by expectations that a new deal to reopen the Strait of Hormuz could be reached as soon as Wednesday, according to the US Treasury Secretary in an interview with CNBC. However, caution remains as similar developments have been mentioned several times since the start of the war, only to be followed by a subsequent reversal. Prices have continued to soften in the early trading window. Power: Power prices fell across most contracts yesterday, with the further out curve being held up by bullish carbon prices. Earlier contracts fell in line with the gas market and recent geopolitical news. Prices have extended losses in this morning’s open. Oil: Oil prices fell around 5% yesterday, nearing a three-week low after comments from Qatar and the US raised hopes of negotiations to end the Iran war. Oil extended yesterday’s losses in the open as traders look towards the possibility of the Strait reopening. Carbon (EUAs): The ICE Dec-26 traded to €81.34/t yesterday. The contract opened this morning at €81.39/t. Carbon (UKAs): The ICE Dec-26 rose to £59.33/t yesterday. Opening this morning at £59.21/t. |
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