European energy markets fell sharply on Tuesday as reports of a draft US-Iran understanding pulled the war premium out of gas, power and crude, only for the move to unwind overnight on fresh reports of tanker losses in the Strait of Hormuz. Underlying fundamentals remain tight rather than comfortable, with European storage below par for the time of year, Norwegian supply still partially curtailed and around a gigawatt of UK nuclear capacity offline.
Natural Gas
Prompt gas fell because sentiment turned, not because the physical balance improved. UK NBP day-ahead settled at 224.00 p/therm, down 7.00 p/therm, and TTF day-ahead at €92.18/MWh after trading in a €11 range as reports of a Washington-approved memorandum on Iran’s nuclear programme reversed an earlier rally driven by US strikes. Tehran then rejected suggestions that a deal was close. The forward curve fell between 8 and 10 p/therm across the board, with December 2026 at 226.17 p/therm, Q1 2027 at 221.86 p/therm and Winter 2027 at 154.75 p/therm, leaving the strip some 5 to 8 per cent lower on the week. Supply remains the constraint: Norwegian exit nominations have recovered to 332.1 mcm/day with curtailments easing to 17.8 mcm/day as unplanned work at Troll and extended maintenance at Oseberg taper, flows to the UK are around 98 mcm/day, and UKCS output has slipped to 98.90 mcm/day. LNG sendout is robust, with South Hook, Dragon and Isle of Grain together just under 50 mcm/day and ten cargoes due into north-west Europe by 9 November, though Freeport feedgas has still not recovered from its late-October drop. European storage sits at roughly 74 per cent full, a thinner buffer than the market has carried into recent winters, and that shortage is why Summer 2027 is trading above Winter 2027 - an unusual inversion that prices in a difficult refill season ahead.
Electricity
UK power followed gas lower but held a wide premium at the prompt, where the system is genuinely tight. Day-ahead baseload settled at £205.00/MWh, down £3.17, with peak at £216.02/MWh, yet the December 2026 contract sits almost £30/MWh below that at £176.75/MWh. Curve contracts shed £4 to £5/MWh, taking Q1 2027 to £181.93/MWh, Winter 2027 to £124.78/MWh and Calendar 2027 to £138.75/MWh. Around 1.1 GW of advanced gas-cooled reactor capacity is unavailable across the Heysham stations, with Heysham 1-1 entering a 65-day planned outage on Tuesday and Torness 2 due off from 27 November. With wind output declining and gas-for-power demand rising to 54 mcm/day, CCGTs are the marginal plant for most of the day and clean spark spreads widened slightly, to around £24/MWh. The intraday shape was volatile, with the system price moving from a floor near £156/MWh overnight to £348.70/MWh in the evening ramp and imbalance volumes swinging from 482 MWh long to 537 MWh short within a few hours. Continental day-ahead baseload settled between €236 and €249/MWh across Germany, France and the Netherlands, and French risk is rising, with EDF industrial action due to begin this evening against a fleet already heavily committed to maintenance.
Other Commodities
Crude softened on the same de-escalation headlines, with Brent front-month settling $1.17 lower at $103.60/bbl and WTI at $96.09/bbl, leaving Brent just over 9 per cent down on the week - a sizeable discount of Gulf supply risk for a conflict that has not ended. Prices rose again in volatile trading on Wednesday as the market waited on Washington’s next move. Coal fell with the complex, API2 ARA Cal 2027 down $3.48 to $136.54/tonne and Cal 2028 at $125.92/tonne. Carbon moved in opposite directions across the two schemes: EUA Dec 26 eased €0.59 to €89.93/tonne, though it remains 2.1 per cent higher on the week, while UK ETS Dec 26 firmed £0.82 to £67.19/tonne and is up 3.5 per cent on the week, narrowing the UKA discount to EUAs to roughly £7.80/tonne from around £9.30 the previous day. In global LNG, JKM eased to $31.12/MMBtu but its premium over TTF widened to $1.08/MMBtu, keeping some pull on flexible Atlantic cargoes, while Henry Hub spot firmed to $2.63/MMBtu. Sterling was close to unchanged at 1.1996 against the euro and 1.3411 against the dollar, so currency added nothing to UK import economics.