Increased US – Iran tension drives prices up
It was a session of two halves at the NBP on Wednesday. Gas prices opened on a bearish footing but reversed course with a strong afternoon rally.
Contracts across the curve gained value, with the most pronounced upside concentrated at the front end.
Geopolitical tensions provided most of the support for price increases. Despite ongoing discussions on a potential nuclear agreement, tensions between the US and Iran continue to deteriorate.
President Trump has intensified pressure on Tehran, including deploying additional US naval assets to the region.
Iran appeared to respond by temporarily closing the Strait of Hormuz for naval exercises yesterday afternoon.
The move unsettled the market and amplified concerns over near term supply security, given that the strait handles up to 25% of global LNG and oil shipments.
On the power front, UK baseload prices broadly mirrored the upward trajectory seen in gas, with the same bullish fundamentals driving contracts higher into the close.
An additional lift came from carbon, where rising EUA prices perhaps helped reinforce the bullish sentiment.
According to ICE data, EUA futures posted another day-on-day gain, climbing by roughly 1.5€/tonne.
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Price commentary courtesy of Crown Gas and Power 