Geopolitical tensions drives up wholesale prices

Gas prices retraced on Tuesday at the NBP, supported by news attacks across Lebanon and UK capacity restrictions.

Key contracts struggled to hold at multi-month lows as energy markets continued to monitor geopolitical developments closely.

Reports of wide scale attacks against Hezbollah operatives in Lebanon may have played into the bullish sentiment. Hezbollah, a UK proscribed terrorist organisation, has accused Israel’s Mossad (National Intelligence Agency) of planting explosives in pager devices leading to the deaths of at least 9 and the wounding of nearly 3,000 people.

Israel has so far declined to comment on the events and there are now fears that retaliation from Hezbollah could intensify fighting in the region.

A drop in UK gas production may have served as a secondary source of support.

According to data from system operator National Gas, unplanned maintenance the Culzean field and Perenco Bacton terminal combined to remove capacity at a rate of 9.25mcm/day, tightening the British supply and demand dynamic.

This morning, gas prices have opened in negative territory, with the Winter 24 front-season contract currently being offered circa 1.2p/therm (0.04p/kWh) below its previous settlement at time of writing.

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Price commentary courtesy of Crown Gas and Power