Wholesale prices dragged in both directions amid geopolitical instability

Gas prices were dragged in both directions at the NBP on Monday, as robust supply fundamentals countered geopolitical instability.

For the majority of the session the market was firmly in the hands of the bulls with key contracts being propelled to new yearly highs. The Winter 24 front-season contract had managed to surge more than 6p/therm (0.2p/kWh) above its previous close by 1pm UK time.

The earlier rally seemingly disintegrated later in the afternoon with curve contracts retreating into the close, highlighting a degree of volatility that has not been observed at the NBP for quite some time.

The ongoing Ukrainian incursion into Russian territory will have no doubt fed into the bullish sentiment. Ukrainian troops were pictured outside of Gazprom’s offices in the Kursk region, close to the Sudzha gas nomination point for onward flows to the European Union.

Kyiv claimed on Monday that it is currently in control of some 1,000 sq km of Russian territory.

At the same time, a cooling tower at a (dormant) Russian occupied nuclear plant situated within Ukraine’s Zaporizhzhia Region caught fire over the weekend. The Zaporizhzhia plant is the largest in Europe and one of the largest in the world and the cause of the fire remains unclear at this time with both Russia and Ukraine trading blame.

In other news, Downing Street has reported that UK Prime Minister Keir Starmer spoke to Iranian President Masoud Pezeshkian on Monday, pressing that there was a “serious risk of miscalculation and now was the time for calm and careful consideration”.

While diplomatic efforts continue around the world to prevent a wider conflict in the Middle East, the US has sent an armed submarine to the region and the Pentagon confirmed aircraft carrier USS Abraham Lincoln has been ordered to “accelerate” its voyage from the Pacific to the Middle East, stoking fears that a retaliatory strike from Iran could be imminent.

This morning, curve prices have continued to head south following on from yesterday afternoons late sell off. The Winter 24 front-season contract is currently being offered circa 1.5p/therm (0.05p/kWh) below its previous settlement at time of writing.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power