Energy Market Update - 02 February 2026
European gas and power opened sharply lower as revised weather models pointed to a shallower cold spell than feared, while easing US–Iran tensions pulled oil softer and carbon extended its recent sell-off.
European gas moved lower at the prompt as traders rapidly repriced weather risk after volatile Feb-26 expiry trading. NBP Mar-26 was indicated around 84.48p/therm versus Friday’s 95.20p/therm settlement, with TTF also weaker across the near curve. The UK system opened around 17 mcm/day long, with demand forecast roughly 45 mcm below seasonal norms as temperatures track about a degree above average. Gas-for-power demand was expected to remain broadly flat near 41 mcm/day, supported by a recovery in wind generation. Supply-side fundamentals were comfortable: Norwegian exit nominations were around 344 mcm/day, with Vesterled flows rising to 17 mcm/day, and UK LNG send-out up to about 96 mcm/day after an increase at South Hook. A healthy slate of LNG arrivals into north-west Europe was expected in coming days. Further out, seasonal contracts eased but remained supported by the storage deficit, with NBP Sum-26 around 73.47p/therm and Win-26 near 77.26p/therm. EU storage was reported near 41.13% full, around 12 percentage points below last year, with Germany at 32.4% and the Netherlands at 25.6%, keeping injection-season economics in focus even as prompt risk premia faded. In the US, Henry Hub spot fell sharply from $10.25 to $7.18/MMBtu as production recovered quickly from freeze-offs, undercutting the cold premium faster than typical historical patterns.
Power tracked gas lower, led by the prompt. UK day-ahead baseload was indicated around £84.50/MWh versus Friday’s £97.92/MWh, with higher wind output weighing on near-curve prices after generation surged to around 19.3 GW and materially reduced gas-fired output. Forecasts pointed to wind fluctuating around seasonal norms through the week, but with a potential drop next week as temperatures cool, which could reintroduce tightness if renewables underperform. On the Continent, German Mar-26 baseload repriced quickly, opening below €95/MWh after settling above €100/MWh on Friday, and French baseload was also weaker. UK seasonal power eased but was more resilient than gas, with Sum-26 near £74/MWh and Win-26 around £80/MWh. Nuclear availability remained a watchpoint, with Hartlepool Unit 2 offline, Torness Unit 2 in a planned outage from 20 January, and Heysham 2 Unit 7 running at reduced capacity. Clean spark spreads compressed as both gas and carbon fell.
Oil softened in early trading as US–Iran diplomatic signals reduced the perceived risk of disruption through the Strait of Hormuz. Brent, after settling near $70.69/bbl on Friday, eased as Trump referenced discussions with Iran and Iranian authorities signalled they would not proceed with previously reported live-fire naval drills. Coal diverged from the broader sell-off, with ARA CIF Cal-27 rising to $103.47/tonne, supported by improved switching economics. Carbon continued lower, with EUA Dec-26 at €81.26/tonne (down €2.72) and UKA Dec-26 at £61.89/tonne (down £3.24), pushing coal-to-gas switching profitability to its strongest level in roughly three years and reinforcing the link between weaker residual load expectations, reduced thermal generation needs, and softer near-term allowance demand. Geopolitical risk remained in the background: trilateral talks between the US, Ukraine and Russia were set for 4–5 February in Abu Dhabi, while ongoing conflict risk continued to pose potential upside tail risk to European energy balances given the already thin storage position.