Prices continued to fluctuate on Thursday, with significant increases in near-term contracts for both gas and electricity. Further out, the situation was more stable, although prices still increased.
On the generation front, the price also rose over the past week, reaching £116.80 per megawatt-hour. Renewables accounted for 44% of generation, but the high cost of gas drove up the overall price because it is set by the most expensive source required to meet demand.
As the situation in the Gulf calms down, we expect prices to fall. However, there will likely be continued volatility as claims and counterclaims are made.
Gas: Gas prices returned to bullishness yesterday, reversing any losses from the previous sessions sharp sell off. The recovery has been interpreted as technical and positioning-led rather than fundamental changes in the market. Geopolitical news was mixed yesterday as the market welcomes an agreement between Iran and Oman to re-open the strait, but heavy uncertainty of what this agreement means for other countries remains. Market prices have continued to strengthen this morning. Power: Power prices rose alongside the gas market yesterday, also erasing the previous session’s losses. Middle East risk supported prices as 30 Yemeni government soldiers were killed in Houthi attacks, exacerbating an already unstable situation. Prices in the further out curve were additionally supported by rising carbon costs. Power prices have continued their bullish momentum in the market open today. Oil: Oil prices settled almost $3/barrel higher yesterday following news that the Iranian parliament is reviewing a bill to ban US, Israel and any other country deemed hostile from the Strait of Hormuz, with fines of up to 20% of the value of the cargo. Prices have continued to rise in the open. Carbon (EUAs): The ICE Dec-26 traded to €81.89/t yesterday. The contract opened this morning at €82.01/t. Carbon (UKAs): The ICE Dec-26 rose to £59.48/t yesterday. Opening this morning at £59.48/t. |
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