Energy Market Report - 07 October 2026
European energy markets rallied again on Tuesday as a reported strike on an LNG carrier in the Strait of Hormuz pushed a geopolitical risk premium across gas and power forward curves, even as day-ahead prices eased on an improving wind forecast. The wider commodity complex was mixed, with crude holding just above $100/bbl, coal firmer and carbon lagging the energy rally.
Natural Gas
Gas prices strengthened across the curve on Tuesday, driven by supply security rather than any deterioration in actual flows. Reports that the Greek-flagged LNG carrier Maran Gas Mystras was struck by a projectile in the Strait of Hormuz focused attention on the vulnerability of Qatari export transits, with crossings through the Strait falling to 22 on 5 October from 26 the day before. NBP day-ahead settled at 180.40 p/therm and front-month November at 188.57 p/therm, up 4.98p on the day and nearly 7 per cent on the week, while Dutch TTF front-month closed at €75.69/MWh. Physical supply remains comfortable by comparison: Norwegian flows held at 329.3 mcm/day despite outages, north-west European LNG sendout ran slightly above the October average at 291.9 mcm/day, and ten cargoes are due into regional terminals between 7 and 10 October, mostly from the United States. The binding constraint is storage. European inventories stand at 72.83 per cent against a five-year norm nearer 87 per cent, and the German regulator has now confirmed the country will miss its 70 per cent target for 1 November, projecting around 61 per cent instead. Germany at 59.23 per cent and the Netherlands at 60.66 per cent are well short of French and Italian stocks at 85.47 and 88.13 per cent respectively, leaving the region sensitive to any further interruption to LNG supply as heating demand builds.
Electricity
UK power forwards tracked gas higher while the prompt corrected. November baseload settled at £151.70/MWh and January 2027 at £163.89/MWh, up more than 10 per cent on the week, with Calendar 2027 at £122.47/MWh. Day-ahead baseload moved the other way, falling £12.21 to £159.40/MWh as forecasters brought in an Atlantic low expected to lift UK wind output above 16 GW from Thursday, having bottomed near 7.7 GW on Wednesday. Gas-for-power demand has already fallen to around 20 mcm/day as a result, leaving the UK system some 11 mcm/day long this morning. The intraday picture remains far more volatile than the daily averages suggest: Monday's system price ran from £123.38/MWh overnight to £415.21/MWh in the evening ramp, with the system more than 700 MWh short at the peak, and the previous session had seen prices fall to negative £28.49/MWh at midday on strong solar. Nuclear availability is a persistent drag, with Heysham 2 unit 8 fully offline, Heysham 1 unit 2 derated on an unplanned outage running into late February, and further planned losses through the winter. Continental conditions are no easier, with low river flows extending France's 3 GW Chooz outage to 20 October, Spanish hydro stocks at a near three-year low of 47.1 per cent and Romania's 1.4 GW Cernavoda plant still offline on low Danube levels.
Other Commodities
Crude held its ground without extending, with Brent front-month settling at $100.58/bbl and WTI at $89.44/bbl. Houthi claims of strikes on Riyadh airport and an Aramco facility, alongside an intercepted ballistic missile aimed at Khamis Mushait, are keeping a floor under the market, while Saudi Arabia's restoration of East-West pipeline capacity to 5.8 million bpd and the G7's 100 million barrel reserve release are capping it. Coal firmed, with ARA CIF Calendar 2027 up $1.50 to $139.47 per tonne and 3.93 per cent higher on the week, reinforcing coal's advantage over gas in the European merit order where German dark spreads hold a €50.80/MWh premium over clean sparks of €1.80/MWh. Carbon was the laggard of the complex: EUA December 2026 rose €0.91 to €84.78 per tonne but remains 1.36 per cent lower on the week, while UK ETS December 2026 added £0.23 to £60.46 per tonne, leaving UK allowances at a €13.55 per tonne discount to their EU equivalent. LNG benchmarks tightened further, with Asian JKM up $0.84 to $25.79/MMBtu and north-west European LNG at $24.38/MMBtu against Henry Hub November of $3.11/MMBtu, keeping the Atlantic arbitrage firmly open. Sterling was firmer, gaining 0.40 per cent against the dollar to 1.3272.