Energy Market Report - 07 May 2026
European energy markets fell sharply on Wednesday as improving US-Iran peace prospects triggered a broad unwinding of geopolitical risk premium across gas, power and crude oil. The bearish move was tempered by tightening Norwegian supply and EU storage at a five-year low for early May, while carbon allowances bucked the trend on compliance buying and softer expectations for July's UK ETS reform package.
Natural Gas
NBP and TTF posted heavy losses on Wednesday, with NBP front month settling 6.5 per cent lower at 107.56 p/therm and TTF Jun-26 down 6.4 per cent at €43.90/MWh, on reports that the US and Iran are close to agreeing a one-page memo to end hostilities. Washington has paused its Project Freedom convoy operation through the Strait of Hormuz, although Iran's move to establish a 'Persian Gulf Strait Authority' to levy transit tolls has tempered the de-escalation narrative and prompted a partial retracement into 7 May. Underlying fundamentals are tighter than the front-curve move suggests: planned outages at Troll, Kårstø and Gullfaks begin today curtailing combined output by 44.1 mcm/day, with an unplanned Troll compressor fault adding a further 21.9 mcm/day. Total NCS exit nominations sit around 280 mcm/day with Kollsnes back online, and Norwegian flows to the UK are up 6 mcm/day on stronger Langeled deliveries. UK LNG send-out is steady at 12 mcm/day, while EU storage at 34 per cent fullness - 6 to 7 percentage points below last year and a five-year low for this point in summer - keeps the curve sensitive to any further supply or weather disruption.
Electricity
UK baseload tracked gas lower into Wednesday's close, with the day-ahead settling at £108.92/MWh, Jun-26 down 4.5 per cent to £91.58 and Win-26 off 5.7 per cent at £94.02. The morning picture is split: day-ahead is indicated softer near £105/MWh, but Jun-26 and Q3-26 are firming a few pounds against yesterday as the curve consolidates and weather support kicks in. Wind generation remains below seasonal norms and is forecast to improve into the weekend, with renewable output peaking above norm around 12 May; the CCGT-heavy running mix leaves the prompt sensitive to gas direction. The nuclear maintenance stack provides clear curve support: Heysham 1-2 remains offline on an unplanned outage running into mid-June, Torness-1 began a 27-day planned outage on 1 May, and overlapping Heysham 2-8, Sizewell B-1 and B-2 outages stack through May, with Hartlepool-1 from 5 June. Continental peers fell in sympathy, with DE Jun-26 base settling at €84.47/MWh and Win-26 at €109.06.
Other Commodities
Brent for Jun delivery collapsed 7.8 per cent to $101.27/bbl and WTI fell 7.0 per cent to $95.08, the moves wholly geopolitical as the market unwound the Hormuz risk premium; Brent has steadied this morning on a cautious read of the proposed peace memo. Coal ARA CIF Cal-27 fell 4.9 per cent to $117.12/tonne, tracking the broader complex but with less geopolitical sensitivity. Carbon stood apart: EUA Dec-26 firmed 0.45 per cent to €76.05/tonne and is up 3.89 per cent on the week on compliance buying, hedge fund accumulation of long positions, and revised expectations that the July UK ETS reform will be less drastic than first thought; UK ETS Dec-27 sits at €60.16/tonne, with UKAs lagging the EUA rally and the EUA-UKA spread widening modestly. JKM M+1 eased to $16.89/MMBtu while Henry Hub Jun-26 was little changed at $2.75/MMBtu, leaving the trans-Atlantic LNG arb broadly stable as US-origin cargoes continue to dominate scheduled NW European terminal arrivals. Sterling was little changed against the euro at 1.1578 but firmed slightly on the dollar at 1.3591.