Energy Market Report - 11 March 2026
Energy markets swung violently over the past 24 hours as ceasefire optimism from President Trump collided with overnight military escalation in the Strait of Hormuz. Gas and power staged partial recoveries on Wednesday morning after Tuesday's dramatic sell-off, while carbon bucked the trend on fuel-switching dynamics.
Natural Gas
Tuesday produced some of the sharpest single-day losses since the US-Iran conflict began, with NBP day-ahead settling at 116.50 p/therm - down 23.50 p/therm - and TTF day-ahead falling to around €46.6/MWh from near €55.8/MWh on 9 March. The front season (Sum-26) dropped more than 15 per cent to 114.12 p/therm and Win-26 fell to 109.65 p/therm, as markets rapidly repriced conflict duration risk following Trump's Monday evening suggestion that hostilities are nearing their end. That optimism has already been tested. Overnight reports of 16 mine-laying vessels destroyed and three commercial ships damaged in the Strait pulled prices sharply higher into Wednesday morning, with NBP recovering to around 126-130 p/therm and TTF back above €50/MWh.
The physical picture, however, remains reasonably comfortable. UK system demand eased to around 200 mcm/day - below seasonal norms as temperatures hold above average across north-west Europe. UKCS production slipped to approximately 101 mcm/day, while Langeled flows held steady at 61 mcm/day and Vesterled jumped to 13 mcm/day from just 1 mcm/day the prior session. Norwegian output is rebounding as maintenance winds down, with Ormen Lange and Kristin expected to return tomorrow, adding roughly 10 mcm/day of combined capacity. UK LNG send-out remains firm at 52 mcm/day across South Hook, Dragon and Grain, though wider European regasification has dropped to around 340 mcm/day - well below the month-to-date average of roughly 425 mcm/day - reflecting Strait-related shipping disruption. EU storage recorded its first net injection of the year on 8 March, lifting inventories to approximately 30.3 bcm or 29 per cent of capacity, which should provide some comfort as the early injection season approaches.
Electricity
Power markets tracked gas lower on Tuesday with extraordinary moves on the prompt. UK day-ahead baseload settled at just £63.94/MWh - down £60/MWh from Monday's £124/MWh print - while day-ahead peak collapsed to £69.21/MWh from £129/MWh. A rebound in renewables compounded the bearish pressure, with wind averaging 15.5 GW and contributing around 43 per cent of the GB power mix. Wednesday morning offers show near-curve baseload continuing to ease, with Sum-26 at £92.00/MWh, Win-26 at £91.00/MWh and Sum-27 at £71.00/MWh. On the nuclear front, the 600 MW Heysham 2 unit began ramping up on Wednesday following an unplanned outage since 2 March, with full capacity expected by Thursday - a timely return given that Hartlepool 2, both Heysham 1 units and Torness 2 remain offline. Wind generation is forecast to stay elevated through 16 March before dropping below seasonal averages, which could see prompt peaks re-widen if gas prices remain firm. Clean spark spreads compressed on Tuesday as gas fell faster than power in some tenors, with carbon's counter-trend firmness further squeezing CCGT margins on near-dated products.
Other Commodities
Brent crude bore the brunt of Tuesday's repricing, settling at $87.80/bbl - down over 11 per cent - after Trump's comments were reinforced by G7 discussions around a potential joint release of 300-400 million barrels from strategic reserves. Ministers stopped short of committing, requesting an IEA assessment first, though the discussion itself signals political willingness to cap further rallies. WTI followed suit at $83.45/bbl. Coal fell in sympathy, with ARA CIF Cal-27 settling at $121.48/tonne, down nearly 8 per cent.
Carbon
Carbon diverged from the broader complex. EUA Dec-26 rose €2.01 to €72.91/tonne, likely supported by fuel-switching dynamics as lower gas and oil prices made gas-fired generation more competitive relative to coal, increasing EUA demand at the margin. UK ETS Dec-26 edged up to £39.27/tonne. The wide EUA-UKA spread persists, and any movement on cross-market linkage remains a medium-term watch point.
Outlook
The tug-of-war between diplomatic optimism and physical disruption risk continues to drive extreme intraday volatility. Tuesday's sell-off demonstrated how quickly risk premia can unwind on ceasefire rhetoric, but overnight escalation in the Strait showed equally that the geopolitical premium refuses to be fully priced out while active disruption persists. Fundamentals offer some reassurance - EU storage has begun injecting, Norwegian output is recovering and UK LNG send-out is holding firm - but prompt pricing remains hostage to developments on the water. With UK temperatures due to cool into the weekend and wind generation forecast to fall after 16 March, the next few sessions could remain choppy. The credibility of ceasefire talk versus the reality of continued mine-laying in the Strait will likely set the next directional cue.