Energy Market Update - 03 February 2026
European gas and power sold off sharply as weather forecasts turned milder for mid-February and US-Iran de-escalation helped unwind geopolitical risk premia, pulling oil lower and dragging prompt gas and power contracts down.
European gas prices fell hard at the front of the curve as milder mid-February forecasts and signs of US-Iran de-escalation removed key supports for winter risk pricing. In the UK, NBP Mar-26 dropped from 95.25p/therm on Friday to 81.34p/therm at the close and was trading nearer 77p/therm this morning. NBP day-ahead settled at 88.38p/therm, down more than 15p, while the Feb-26 balance-of-month eased to around 85p/therm after trading above 100p/therm before expiry. The curve softened through Q2-26 (73.48p/therm) with smaller moves further out, signalling prompt risk was repriced while structural tightness remains. TTF Mar-26 was €32.20/MWh. Physical conditions were comfortable, with Norwegian flows around 344 mcm/day, the UK system opening around 8 mcm/day long, strong LNG send-out (South Hook near 59 mcm/day; Dragon near 27 mcm/day), and Langeled steady near 72 mcm/day, while IUK exports rose to about 12 mcm/day. The key underpin remains storage: continental inventories were 40.55% full as of 1 February (463 TWh) versus 53.13% (609 TWh) a year earlier, the lowest seasonal level since 2022. Global benchmarks fell too, with JKM at $10.925/MMBtu, while Henry Hub March dropped 25.7% to $3.237/MMBtu as warmer forecasts and a rapid rebound in US production (111.6 bcf/day) erased the late-January cold premium.
Power tracked gas lower. UK day-ahead baseload settled at £83.88/MWh (down £14) and peak at £94.45/MWh, while Mar-26 baseload fell to £83.34/MWh and was indicated softer this morning near £82.45/MWh. Sum-26 base slipped to £72.82/MWh and Win-26 to £78.72/MWh, with longer-dated losses contained by steadier carbon and broader curve support. Wind output ran above seasonal norms and is expected to stay elevated, reducing residual load and gas-for-power demand; interconnector flows were supportive, and nuclear outages at Hartlepool, Torness-2 and Heysham were largely seen as priced in. German Mar-26 baseload fell in line, down over 7% to €92.69/MWh.
Oil led the broader risk-off move, with Brent M+1 settling at $66.30/bbl (down over 6%) and WTI at $62.14/bbl as the market priced out Iran-related risk premia following diplomatic signals and Iran shelving planned live-fire drills in the Strait of Hormuz. Coal ARA CIF Cal-27 eased to $101.61/tonne. Carbon diverged from the complex, with EUA Dec-26 rising to €83.28/tonne and UKA Dec-26 to £62.98/tonne, likely reflecting positioning and compliance-related demand. Geopolitics remains a background risk despite the repricing: Russia resumed major strikes on Ukraine’s energy system, while US–Ukraine-Russia talks were scheduled for 4–5 February in Abu Dhabi.