Energy Market Report - 08 October 2026
Escalating conflict in the Gulf set the tone across energy markets on Wednesday, with gas and the forward power curve pushing higher on supply risk while prompt electricity collapsed under an incoming storm. Carbon was the day’s biggest mover, with UK allowances reaching a seven-month high on reports of a deal to link the UK and EU emissions trading schemes.
Natural Gas
Gas rose for a third consecutive session, driven by geopolitical risk layered onto genuine supply tightness rather than by weather. Day-ahead NBP settled 5.60p higher at 186.00 p/therm and November added 5.05p to 193.62 p/therm, with January 2027 at 198.13 and Winter 2027 at 139.98; on the Continent, front-month TTF settled at €78.08/MWh with day-ahead at €78.64/MWh, flipping into a premium over the month ahead. The escalation has been broad: Houthi strikes on civilian aviation infrastructure inside Saudi Arabia drew a Saudi air response, a strike on an oil tanker in the Strait of Hormuz was confirmed after earlier damage to the LNG carrier Maran Gas Mystras, and an adviser to Iran’s Revolutionary Guard threatened shipping lanes along Oman’s coast. Physical supply has not helped: extended unplanned outages at Norway’s Dvalin and Heidrun fields have taken total offline capacity to around 39 mcm/day and cut flows to the UK by 8 mcm/day, with Langeled down to 62.00 mcm/day and UKCS production easing to 86.60 mcm/day. European storage stands at 72.97 per cent of capacity, nearly 14 percentage points below seasonal norms, with the UK at just 33.13 per cent, though healthy exit nominations of 327.5 mcm/day, LNG sendout of 10 mcm/day and a system that opened 12 mcm/day long keep the prompt comfortable.
Electricity
Electricity moved in two directions at once. Day-ahead baseload fell £24.40 to £135.00/MWh and peak dropped £15.35 to £146.70/MWh as gale-force winds reached north-west Europe, lifting wind from 9.9 per cent of the UK generation stack to 34.2 per cent and pushing gas-fired output down from 49.8 per cent to 33.0 per cent; continental day-ahead markets fell harder, with French prices down €72.00 to €116.90/MWh and German down €47.75 to €144.25/MWh. The forward curve went the other way, tracking gas, with November baseload adding £4.95 to £156.65/MWh and Q1 2027 settling at £159.01/MWh. Intraday on Wednesday the system was tight before the wind arrived, averaging £168.43/MWh with an evening block from 17:00 to 19:30 averaging £238.85/MWh and a high of £244.00/MWh, whereas today has averaged closer to £156/MWh and rolled over to £135.01/MWh by early evening as wind built. The prompt has further to fall, with day-ahead baseload offered at £79.50/MWh this morning and UK wind forecast above 17 GW into the weekend, but tight margins limit the downside on the curve: the Heysham and Hartlepool units carry substantial outages, French nuclear unavailability is scheduled at 18.9 GW next week, and Italian hydro deficits have widened to 671 GWh against five-year norms.
Other Commodities
Crude eased fractionally on the settlement, with Brent M+1 down $0.38 to $100.20/bbl and WTI at $88.28/bbl, but has since broken above $103/bbl on Gulf shipping risk and on Tropical Storm Isaias shutting in around 510,000 bpd of US Gulf of Mexico production alongside a 3 million barrel weekly US inventory draw. Coal API2 Cal 2027 was broadly flat at $139.61/tonne. In carbon, UK allowances for December 2026 rallied £2.49, or 4.1 per cent, to £62.95 per tonne, a seven-month high, after reports that agreement had been reached to link the UK and EU schemes, while EUAs for the same delivery added just €0.47 to €85.25 per tonne, narrowing the UK discount to roughly £9.21 per tonne. Global LNG benchmarks firmed across the board, with north-west European November at $24.83/MMBtu, Asian JKM at $26.40/MMBtu and Henry Hub November at $3.20/MMBtu. Sterling was mixed, firming to 1.1814 against the euro and easing to 1.3210 against the dollar.