Prices increase further as tensions in Middle East escalate

Gas prices extended their bull run at the NBP on Tuesday, with gains once again underpinned by tensions between the US and Iran.

The largest moves of the session were observed at the front-end, while contracts further out began their day in bearish territory, however any downside was erased come afternoon trading although upside to prices were much more muted.

US President Trump focused attention on Iran’s Pickaxe Mountain during a press conference yesterday, suggesting that the US could soon target the suspected nuclear facility.

The comments prompted a response from Tehran, with Iranian officials warning that any such action would be met with a “powerful attack” targeting US interests across the region.

On the power side, baseload contracts largely mirrored movements in the gas market, with prompt prices posting gains while contracts further along the curve opened lower before recovering during afternoon trading.

However, despite the broadly bullish sentiment, likely driven by escalating geopolitical tensions in the Middle East, stronger renewable generation may have helped to limit upside at the front-end of the curve.

According to National Grid data, wind output increased significantly, rising by approximately 47% day-on-day.

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Price commentary courtesy of Crown Gas and Power