Energy Market Update - 12 January 2026
European gas and power markets firmed through the curve on Friday, with weather forecasts and geopolitical uncertainty driving sentiment as temperatures are expected to shift from mild conditions to below-seasonal levels next week.
Gas prices strengthened across forward contracts, with NBP day-ahead settling around the mid 70s p/therm on Friday, though this morning's session saw further gains approaching the high 70s as weather models indicated cooling ahead. The February contract traded near the mid 70s p/therm, while Summer 26 was around the mid 60s. Northwest Europe is currently experiencing mild temperatures, around 3-4 degrees above seasonal norms, but multiple weather models including GFS, AIFS and EC are forecasting temperatures to fall up to 4 degrees below seasonal levels from Monday onwards. This shift could increase heating demand and accelerate storage withdrawals, with European storage currently sitting at approximately 55%, down nearly 12% year-on-year.
Norwegian flows remained relatively stable around 340mcm/day, though UK-bound deliveries via Vesterled were reduced slightly. The Nyhamna facility continues its partial outage until 15 January, removing roughly 20mcm/day from export capacity, with additional maintenance at Aasta Hansteen and Dvalin scheduled for 21 January. UKCS production was nominated around 100mcm/day. LNG arrivals remain robust with ten cargoes scheduled over the coming fortnight. Geopolitical tensions continue, with reports of potential US military and cyber responses against Iran heightening concerns over LNG shipping route security.
UK power prices followed gas higher throughout Friday's session. Day-ahead baseload settled around the mid £80s/MWh, whilst forward contracts also strengthened with February trading near the low to mid £80s/MWh and Summer 26 around £70/MWh. This morning saw further gains with February baseload approaching the high £80s. Renewable generation currently comprises a significant portion of the supply mix, with wind making up the majority alongside CCGT generation.
However, wind output across Northwest Europe is forecast to remain choppy over the next couple of days before falling sharply below seasonal levels into the weekend and remaining subdued as cooler weather arrives. This reduction in wind generation, potentially 10-20% below seasonal norms next week, is expected to increase reliance on gas-fired generation. Nuclear availability remained constrained following EDF's shutdown of two Flamanville reactors on Friday due to Storm Goretti. Cross-border flows from Belgium and the Netherlands have helped balance the system during lower domestic generation periods.
Brent crude held relatively steady around $63 per barrel, up modestly from the low $60s as markets monitored Middle Eastern geopolitical developments. Coal prices for ARA delivery in calendar year 2027 held near $97 per tonne, broadly unchanged from the previous session. European carbon markets extended their recent rally, with EUA December 2026 contracts climbing to around €90 per tonne from the high €80s, building on Thursday's 28-month highs driven by robust demand at Germany's weekly auction and investment fund positioning. UK ETS December 2026 allowances rose to around the high £60s per tonne, maintaining their premium over European equivalents.