Energy Market Report – 16 February 2026
European gas and power markets opened sharply lower on Monday as milder weather revisions for the second half of February eased heating demand expectations. Carbon prices extended last week's rout, dragging power contracts lower across the curve.
Natural gas prices fell heavily across prompt and near-curve contracts. The NBP day-ahead settled at 80.05p/therm on Friday, but indicative levels this morning traded closer to the low 70s, with the March contract shedding around 4p/therm on the week. The TTF front-month dropped to a five-week low, falling as much as 6.9% in early trade. The move was driven by weekend weather model revisions pushing warmer air into north-west Europe from around 20 February, trimming the demand outlook for the latter half of the month. Supply conditions reinforced the bearish tone: up to nine laden LNG vessels are expected at UK terminals before month-end, with Asian demand softened over the Lunar New Year holiday and pricing currently incentivising European delivery. Notably, the LNG vessel Seapack Glasgow has reloaded a Chinese cargo and rerouted towards Europe – the first such reload in three years, underscoring the current supply abundance. Norwegian nominations sit at around 330 mcm/day, though an unplanned compressor failure at Ormen Lange is curtailing approximately 5.3 mcm/day. Further along the curve, NBP Summer-26 fell 1.75p/therm to 70.25p/therm and Winter-26 lost 1.50p/therm to 75.25p/therm. EU storage remains below 34% full – the lowest since the 2022 crisis – with German tanks under 24%, which keeps a floor under injection-season pricing. However, the improved weather outlook and strong LNG arrivals suggest the draw rate should moderate from here.
UK baseload contracts fell more sharply than gas, dragged lower by a collapse in carbon prices. The day-ahead base settled at £82.55/MWh on Friday, with current morning offers around £78.50/MWh. Summer-26 baseload dropped £1.45/MWh to £65.80/MWh, while Winter-26 shed £1.00/MWh to £72.50/MWh. The carbon rout is the dominant story: the EUA Dec-26 contract lost more than €10/tonne last week after the German Chancellor questioned whether the EU ETS was fit for purpose, citing industrial competitiveness concerns. The political signal triggered aggressive selling, compressing clean spark spreads across the curve. Wind generation is forecast to increase this week, further offsetting heating-driven demand, though the pattern remains choppy and prompt peak volatility is still possible. UK nuclear availability remains constrained, with well over 2 GW of capacity offline across Hartlepool, Torness and Heysham units. If wind underperforms during any cold snaps this week, the residual load stack could tighten quickly on peaks.
Crude oil held largely flat, with Brent at $67.75/bbl and WTI at $62.89/bbl. Markets are watching renewed US–Iran talks in Geneva on Tuesday, though OPEC+ signalling a production increase from April continues to cap the upside. Carbon remains the standout mover: EUAs at €70.68/tonne are down over 10% on the week, while UK ETS allowances settled at £45.50/tonne, having dropped roughly 20% week-on-week on the Dec-27 contract. Political pressure from Berlin, combined with bearish weather revisions and Italian regulatory uncertainty, has created a hostile environment for carbon longs, and further downside cannot be ruled out until the policy noise subsides. Coal bucked the trend, with ARA CIF Cal-27 rising to $106.47/tonne, up nearly 2%, likely reflecting physical market tightness rather than any shift in the broader demand outlook.