Energy Market Update - 04 February 2026
European gas prices recovered on Wednesday after cooler mid-February weather forecasts lifted heating demand expectations, although comfortable supply and healthy LNG arrivals continue to cap the upside.
Prompt gas strengthened after updated AIFS and GFS runs shifted colder, suggesting temperatures around 3–4°C below seasonal norms into mid-February before returning closer to average. The NBP front-month rose to around 79.40p/therm in early trade after settling at 77.98p/therm, while the market remained anchored by a long UK system and steady Norwegian flows. Demand is still tracking roughly 20 mcm/day below seasonal norms, LNG send-out remains healthy despite a 6 mcm/day dip at Isle of Grain, and January LNG arrivals into the UK rose to 28 cargoes versus 21 a year earlier. The main supply watchpoint is Norway, with around 20 mcm/day offline at Nyhamna until 18 February and Gassco exit nominations easing to 340.3 mcm/day, though the reduction has so far been manageable. Further out the curve, Summer 26 NBP settled near 71.28p/therm and Winter 26 near 75.08p/therm, both softer on the week. A weaker Henry Hub backdrop has also improved the perception of Atlantic LNG availability. European storage stands at 40.55%, and while the colder shift offered short-term support, the wider balance remains comfortable, with reports of increased hedge-fund short positioning adding to recent downside pressure.
UK power firmed alongside gas after tracking lower earlier in the week. Day-ahead baseload settled at £87.78/MWh as system demand climbed 3.3 GW to 40.5 GW. Wind output averaged 17.8 GW on Tuesday, representing roughly 44% of the GB generation mix, limiting the need for additional thermal ramping, while CCGT output held broadly steady at 9.5–10 GW despite around 800 MW of unavailability at Pembroke and Peterhead expected to persist until the weekend. On the curve, Summer 26 baseload eased to £72.50/MWh and Winter 26 to £78.47/MWh. Nuclear outages remain a key structural support, with Hartlepool Unit 2 out on an unplanned outage since June 2025, Hartlepool Unit 1 on a planned outage, and Torness Unit 2 offline since late January, while Heysham 2 Unit 7 is scheduled for a planned outage from 13 February. Wind forecasts remain volatile: stronger output over the next couple of days could soften prompt values, but a forecast drop below seasonal norms from Saturday into mid-next week may tighten margins again and increase gas burn.
In wider commodities, Brent settled at $67.33/bbl, edging higher as Middle East risk returned after the US Navy shot down an Iranian drone near a carrier group, even as US–Iran talks are still described as ongoing and Iran seeks to move the venue from Turkey to Oman. The Strait of Hormuz remains the main risk corridor if diplomacy deteriorates, though market structure signals remain relatively calm, with flat time spreads and soft differentials. OPEC output was reported down 230,000 b/d to 28.83 million b/d in January, with Venezuelan disruption a notable contributor, while OPEC+ has started a three-month production freeze and will meet on 1 March to decide whether to continue unwinding cuts. Carbon softened, with EUA Dec-26 at €83.11/tonne and UK ETS Dec-26 at £62.83/tonne, while coal was marginally lower, with API2 Cal 2027 at $100.70/tonne. Separate reporting noted Russia’s oil tax receipts halved in January to 281.7 billion roubles, pressured by weaker prices, a stronger rouble and steeper export discounts, with Urals said to be trading around $26/bbl below Dated Brent at export.