Energy Market Report - 07 April 2026
European energy markets opened sharply higher after the Easter break, driven by escalating US-Iran tensions and disruption at the Strait of Hormuz. Gains faded through the morning as mild weather and comfortable system balances tempered buying interest. Carbon moved against the trend, falling on auction pressure and holiday position-squaring.
Natural Gas
Prompt NBP traded sideways to slightly firmer from Thursday's close, with the UK system opening 27 mcm/day long. Gas-for-power demand is expected to rise by around 13 mcm/day on the day-ahead as wind forecasts weaken following Storm Dave's contribution over the weekend. Norwegian flows to the UK are up approximately 5 mcm/day, with Langeled back at 71 mcm/day and total exit nominations robust at 343 mcm/day. LNG send-out remains modest at around 8 mcm/day across UK terminals. On the curve, geopolitical risk premium dominates - Win-26 NBP was offered around 125.50p/therm this morning, up 3.50p from Thursday, with Sum-27 firmer at 92.60p/therm. The ongoing disruption to Strait of Hormuz transit continues to tighten global LNG and crude balances, underpinning European forwards. TTF May-26 touched €50.50/MWh on the open before retreating to around €49/MWh as mild weather limited physical demand. EU storage sat at approximately 28% as of 2 April following brisk late-season withdrawals, though the draw rate should ease with temperatures 4-5°C above seasonal norms across northwest Europe.
Electricity
UK power prices are lower this morning compared with Thursday's close. Storm Dave delivered strong wind generation over the Easter weekend during reduced holiday demand, pulling prompt prices sharply lower - day-ahead baseload settled at £73.29/MWh on 2 April, down over £34 from the prior session. The system has been broadly comfortable, with interconnectors flowing steadily and wind carrying a sizeable share of the generation mix alongside CCGT. Nuclear availability remains mixed, with Heysham 1-1 entering a planned 137-day outage from 31 March and Heysham 2-7 still running at reduced output. On the curve, UK baseload May-26 is trading around £95/MWh, with Win-26 at approximately £100.50/MWh - both softer than pre-Easter levels. Forecasted UK wind and solar looks broadly in line with seasonal norms over the coming week, which should keep prompt margins manageable. Further-dated seasons remain supported by the elevated gas and carbon complex, with Win-27 power offered around £85/MWh.
Other Commodities
Crude oil has been the standout mover. Brent M+1 settled at $109.03/bbl on 2 April, up $7.87 on the day - an 8.5% recovery - before trading as high as $111/bbl this morning. The market remains acutely sensitive to Strait of Hormuz headlines, with Tehran refusing to reopen passage or accept a ceasefire. Time spreads have firmed alongside flat price, consistent with tightening seaborne supply expectations. Coal ARA CIF Cal-27 edged up to around $126/tonne, though week-on-week moves have been more modest than in oil. Carbon certificates fell - EUA Dec-26 dropped €2.95 to €71.69/tonne while UKA Dec-26 slipped £0.99 to £41.50/tonne, likely reflecting auction supply, lower residual load during the mild Easter period, and pre-holiday position-squaring rather than any fundamental shift.
Outlook
The near-term trajectory hinges on the US-Iran standoff. Any resolution at the Strait of Hormuz would likely trigger a sharp unwind of geopolitical risk premium across gas, oil and power, while further escalation - including threatened US strikes on Iranian power facilities - would add materially to upside risk. On the supply side, planned Norwegian maintenance at Vesterled from 17 April and a one-day Langeled outage on 6 May will tighten flows, while a heavy UK nuclear maintenance programme through the summer provides underlying support for forward power. Mild weather and easing storage draws offer a partial counterweight, but geopolitics remain firmly in the driving seat.