Energy Market Update - 06 February 2026
Energy markets were mixed on Thursday, with gas firming on prompt tightness and divergent weather models while power eased on strong wind output and a sharp sell-off in European carbon. Geopolitical risk remained elevated as US–Iran nuclear talks commenced in Oman.
Prompt gas prices edged higher through the session, with the NBP day-ahead settling at 85.80p/therm. The UK system opened around 17 mcm/day short on Friday morning as Norwegian supply stepped back – Langeled nominations fell to 66 mcm/day and Vesterled dropped to zero, though FLAGS flows held flat. UK LNG sendout softened to approximately 86 mcm/day after Dragon terminal output halved to 13 mcm/day, while South Hook and Isle of Grain remained broadly stable. EU storage stood at 39.17% full as of 3 February following withdrawals of 8.2 TWh, keeping the pace of inventory draw firmly in focus. Summer 26 NBP edged up 0.50p/therm to 74.75p/therm, with the market sensitive to the geopolitical backdrop as Russia–Ukraine negotiations show limited progress and US–Iran tensions escalate following a drone shootdown and tanker confrontation in the Strait of Hormuz. TTF equivalents showed similar patterns, with the front month at €34.50/MWh and Summer 26 at €30.65/MWh – notably, the summer contract still holds a slight premium to winter, reflecting tight storage dynamics. Temperature forecasts remain the key swing factor at the front of the curve, with the EC operational run flagging a deep cold push from 16 February across north-west Europe, though rival model runs are considerably milder.
Power moved inversely to gas, easing across the curve as strong wind generation and the carbon sell-off outweighed modest prompt gas strength. Wind output averaged 20.8 GW, comprising just over 50% of the GB power mix and limiting CCGT to 9.8 GW. Summer 26 baseload fell £0.50/MWh to £73.50/MWh and Winter 26 dropped £1.00/MWh to £78.50/MWh, with the sharp decline in EUA benchmarks filtering bearish sentiment into further-dated contracts and compressing clean sparks on the day. Wind forecasts remain above seasonal averages through Friday before easing back towards normal levels next week, raising the prospect of lower wind coinciding with colder conditions from mid-week, which could provide several days of strong gas-for-power demand and re-widen prompt peaks. UK nuclear availability remains constrained, with Hartlepool 1 and 2 both offline, Torness 2 out for planned work, and unplanned outages at Heysham reducing capacity further. On the Continent, coal and gas-fired generation in Germany accounts for almost 50% of the mix at present due to lower renewable output.
In broader commodities, Brent crude fell sharply, with the front month settling at $67.55/bbl – down $1.91 on the day – as markets positioned ahead of the US–Iran talks, though prices recovered slightly on Friday morning as the threat of US military action kept a floor under prices. Carbon saw the most pronounced moves, with EUA Dec 26 shedding €4.72 to €78.20/tonne and UK ETS Dec 26 tumbling £4.83 to £57.35/tonne, widening the UKA–EUA discount further. The sell-off appears largely driven by a recalibration of residual load expectations amid strong renewables, though the scale of the decline may attract dip-buying if weather risks materialise. Coal ARA CIF Cal 27 bucked the trend, edging up to $102.56/tonne on the week. Sterling weakened against both the euro and the dollar, with GBP/EUR at 1.1506 and GBP/USD at 1.3525.