Energy Market Report – 18 February 2026
Gas and power markets extended their decline on Tuesday, driven by a significant shift in weather models pointing to milder and windier conditions across Europe for the remainder of the month. Carbon bucked the trend with a modest recovery, while crude oil softened on easing geopolitical risk.
European natural gas prices fell across the curve as forecasts showed temperatures lifting 7–8°C above seasonal averages across parts of Europe next week, building a decisively bearish case at the front end. NBP day-ahead settled at 73.00p/therm, down 0.75p on the session, with further losses this morning pushing prompt gas toward 71.00p/therm. UK system demand dropped to 296 mcm/day from 309 mcm/day, and the 14-day outlook now indicates demand falling below seasonal norms from Friday and staying suppressed through weeks 9 and 10, which should slow the pace of storage withdrawals. EU aggregate storage sits at 33.54%, some 11 percentage points below year-ago levels, though the milder trajectory reduces tail risk around end-of-winter inventories. On the supply side, LNG send-out into the UK surged, with combined output from Isle of Grain, South Hook and Dragon climbing by roughly 24 mcm/day. Langeled flows rose to 57.3 mcm/day, though Vesterled and Flags dropped to zero amid the ongoing unplanned outage at Ormen Lange, which continues to curtail Norwegian output by around 11.8 mcm/day – Gassco expects resolution by the end of the week. Seasonal contracts extended their decline, with Summer 26 settling at 68.97p/therm and Winter 26 at 74.12p/therm. Softer US Henry Hub prices, now around $3.00/MMBtu, and drifting Asian JKM have limited the pull on Atlantic LNG cargoes, keeping supply optionality healthy for European buyers.
UK baseload power tracked gas lower on the prompt, with day-ahead base settling at £74.90/MWh, down nearly £4/MWh, while day-ahead peak fell £5.55/MWh to £78.25/MWh. Solar generation rose approximately 13.5% on the session, adding to the weight on near-dated contracts. Wind generation is expected to strengthen materially into the weekend and remain above seasonal norms for the rest of the month, reducing residual load and easing system margins. Curve power was slightly more resilient – Summer 26 baseload eased £0.49 to £65.17/MWh, while Winter 26 dipped only £0.25 to £71.62/MWh. On the continent, recent gas price declines have made gas-for-power generation more profitable relative to coal units, with coal-fired margins turning negative for the first time in a month. Nuclear availability remains a headwind, with Heysham 2-7, Torness 2 and Hartlepool 2 all offline, though planned return schedules are broadly on track. The directional bias for the remainder of February points lower, although any underperformance in wind forecasts could re-tighten prompt peaks quickly.
In other commodities, Brent crude fell $1.23 to $67.42/bbl after US–Iran talks in Geneva were described as constructive, with both sides indicating further discussions to follow, reducing the geopolitical risk premium that had been supporting prices. WTI eased to $62.33/bbl. Carbon reversed its recent slide, with EUA Dec-26 rising €0.90 to €70.08/tonne and UK ETS Dec-26 gaining £0.79 to £47.16/tonne, though both remain well below levels from a week ago – EUAs are still down roughly 11% week-on-week. The recovery appears driven by short-covering rather than a fundamental shift. Coal ARA CIF Cal-27 firmed modestly, up $0.60 to $107.63/tonne, though coal-fired power economics continue to deteriorate in the face of cheaper gas. Sterling weakened slightly, with GBP/EUR at 1.1451 and GBP/USD at 1.3567. On the policy side, the Ofgem price cap is expected to drop around 7% to £1,641 from April following the government's decision to shift renewable certificate costs to general taxation, though rising grid and network costs partially offset the savings.