Energy Market Report - 06 August 2026
European energy markets fell sharply on Wednesday as reports that Iran and Oman are close to finalising an agreement to open a new commercial shipping route through the Strait of Hormuz pulled risk premium out of gas, power and the wider complex. Prices have recovered part of that ground this morning, with traders sceptical that a diplomatic breakthrough will translate quickly into restored cargo flows.
Natural Gas
Gas fell hard across both prompt and curve, with the move driven almost entirely by geopolitics rather than fundamentals. The front-month NBP contract settled at 128.04 p/therm, down 6.4 per cent on the day, while the Winter 26 season closed at 128.96 p/therm, its lowest in over three weeks and around 16 per cent off its late-July peak. Dutch TTF followed, with day-ahead settling at €52.44/MWh. Physical supply remains comfortable: European regasification ran at roughly 227 mcm/day, above recent averages, and virtually every LNG cargo due into Northwest Europe over the coming week is arriving from the United States. Norwegian flows held near 316.6 mcm/day this morning, with annual maintenance at Kårstø removing 13.6 mcm/day until 19 August, and the British system opened 3 mcm/day long with UKCS output up 4.2 mcm/day. The uncomfortable fact behind the sell-off is storage: European inventories reached only around 58 per cent by 4 August, the weakest for the time of year in close to twenty years, with Germany near 46.8 per cent and the Netherlands around 38 per cent, leaving little cushion if the autumn turns cold.
Electricity
British power moved in two directions at once, and renewables explain both. Wednesday delivered an exceptional low-carbon day, with wind averaging 15.1 GW or 47.4 per cent of the generation mix and combined renewables meeting two thirds of demand, the best such day in several weeks. That pushed Wednesday's delivered price down to £88.84/MWh and sent system prices below zero for several afternoon hours, bottoming at minus £48.00/MWh. Today's day-ahead baseload settled at £111.28/MWh, a rise of £22.44 that reflects normalisation from that unusually cheap base rather than any tightening of the system. Along the curve, prices fell with gas: Q4 26 baseload settled at £112.94/MWh and Winter 26 at £112.38/MWh, both down close to five per cent, with Calendar 2027 at £86.80/MWh. Nuclear availability tightens from tomorrow as Hartlepool 2 enters a 16-day planned outage, with Heysham 1 and Torness 1 following later in the month. On the Continent, French, Dutch and German day-ahead prices all settled between €97 and €100/MWh, and heat-related restrictions are curtailing close to 13 per cent of French nuclear capacity despite the fleet posting eight-year output highs in July.
Other Commodities
Crude was flat, with Brent settling at $79.45/bbl as easing Hormuz risk was balanced by escalating attacks on shipping in the Red Sea, where the Houthis claimed a missile strike on a Saudi tanker off Yanbu, reportedly the eighth targeted since a blockade began on 22 July. Coal extended its decline, with API2 ARA Calendar 2027 falling $2.69 to $117.44/tonne. Carbon eased in both schemes, with EU allowances for December 2026 down €0.25 at €81.09 per tonne and UK ETS allowances down £0.47 at £58.86 per tonne, leaving the UK allowance at a currency-adjusted discount of roughly £10.65 per tonne, modestly wider on the day. In global gas benchmarks, September JKM fell $1.14 to $18.75/MMBtu, reducing Asian competition for Atlantic cargoes, while Henry Hub spot slipped to $2.60/MMBtu, keeping US export economics to Europe firmly positive. Sterling was little changed at 1.1666 against the euro and 1.3466 against the dollar.