Energy Market Report - 12 March 2026
UK wholesale energy prices pushed higher on Wednesday and into Thursday morning as escalating Strait of Hormuz supply disruptions continued to dominate sentiment, overshadowing a coordinated release of emergency oil reserves by 32 countries. Prompt gas strengthened further this morning, with day-ahead trading near 128.70 p/therm.
Natural Gas
NBP gas prices corrected sharply higher on Wednesday despite the announcement of a 400-million-barrel emergency oil reserve release across 32 countries. The volume, while significant in absolute terms, equates to roughly 1 per cent of global consumption, and the market quickly moved past it as Strait of Hormuz supply risk remained the dominant driver. TTF day-ahead traded near €48/MWh, with NBP day-ahead around 122 p/therm in the previous session. European storage stood at 29.12 per cent full, with withdrawals running near 1 TWh/day and inventories projected to end winter close to 27 per cent.
The UK system opened 29 mcm/day long this morning, but sentiment across the curve is firmly bullish. Temperatures are set to fall through the weekend - around 2°C below current levels by Saturday - lifting LDZ demand to roughly 178 mcm/day, with weekend levels near 167 mcm/day and working-day-next-week around 149 mcm/day. Norwegian flows are broadly stable, with Langeled near 70 mcm/day and Vesterled around 2 mcm/day, while LNG send-out holds near 51 mcm/day supported by steady output from South Hook, Dragon, and Grain. Seasonal contracts posted substantial gains, with Sum-26 settling at 120.44 p/therm (up 6.33) and Win-26 at 116.49 p/therm (up 6.84). Forward prices were further supported as Strait of Hormuz tensions raised LNG supply concerns, lifting TTF month-ahead to about €49/MWh. Gas-for-power demand is increasing on weaker wind generation into next week, with day-ahead gas-for-power seen near 28 mcm/day rising to around 30 mcm/day for working-day-next-week.
Electricity
UK power day-ahead baseload settled lower at £56.12/MWh (down 7.82), with peak also softer at £63.07/MWh, as a strong rebound in wind generation lifted output above seasonal norms on both Tuesday and Wednesday. Wind is currently the largest contributor to the supply mix, helping ease short-term system pressure. However, prompt softness stands in sharp contrast to the curve, where prices firmed in lockstep with gas - Sum-26 baseload settled at £93.30/MWh (up 3.15), Win-26 at £93.76/MWh (up 3.52), and Win-26 peak at £110.93/MWh (up 3.83).
Nuclear availability remains a significant headwind. Hartlepool Unit 2 has been offline since March 2025 on an unplanned outage, Torness Unit 2 is on planned maintenance, both Heysham 1 units are out on either planned or unplanned work, and Heysham 2 Unit 7 remains offline, with further planned outages at Torness Unit 1 and Heysham 2 Unit 8 scheduled from April and May respectively. With aggregate nuclear output constrained, gas-fired CCGT remains essential to system balancing, and any sustained decline in wind generation into late next week could rapidly tighten prompt margins. Interconnector flows have been broadly supportive, with IFA, BritNed, and Nemo all contributing to imports over the past fortnight.
Other Commodities
Crude oil surged on Wednesday and into Thursday as Strait of Hormuz attacks escalated. Two oil tankers were struck overnight near the Iraqi port of Umm Qasr, with reports of three additional vessels attacked in the Strait, pushing Brent briefly back above 100/bbl before settling at $91.98/bbl, up $4.18 on the day. Some vessels have reportedly transited the Strait by switching off transponders before reappearing once clear, underscoring the extreme conditions facing commercial shipping. Coal firmed in sympathy, with ARA CIF Cal 2027 settling at $123.99/tonne (up $2.51). Sterling was marginally firmer against the euro at 1.1579 £/€ and broadly flat against the dollar at 1.3411 £/ .
Carbon
Carbon markets remain remarkably steady given the volatility across the wider energy complex. EUA Dec 26 settled at €71.86/tonne (down €1.05), while UK ETS Dec 26 edged higher to £40.07/tonne (up £0.80). Higher coal usage resulting from elevated gas prices is being partially offset by broader economic uncertainty linked to the geopolitical situation, keeping carbon range-bound for now.
Outlook
Near-term UK fundamentals are set to tighten as temperatures fall through the weekend and gas-for-power demand rises, particularly if wind generation eases from current above-seasonal levels. The EC46 model suggests a return to milder conditions after 22 March, which could temper heating demand if realised. However, the direction of the broader complex remains firmly tied to developments in the Strait of Hormuz, where overnight tanker attacks and military operations continue to disrupt shipping and maintain elevated risk premia across gas, oil, and power markets. With European storage at just 29 per cent and the UK nuclear fleet heavily constrained, the market has limited buffers against any further supply disruption.