Energy Market Update - 19 January 2026
Energy markets opened sharply lower as milder weather forecasts unwound last week’s cold-driven rally; gas led the move, pulling prompt power down, while tariff headlines and softer carbon added to the bearish tone.
European and UK gas prices reversed at the start of the week after weekend model runs shifted the late-January outlook materially milder. The NBP front-month had spiked above 97p/therm on Friday amid cold-risk pricing, low storage and short covering, but early trading saw that premium fade, with the contract slipping to around 88p/therm. On the Continent, TTF also fell heavily, dropping by more than €4/MWh at the open to roughly €34/MWh. Despite the correction, fundamentals remain tight: European storage is around 50% full, well below last year and the seasonal average, keeping market focus on summer refill economics and the risk of stronger competition for LNG into next winter. Norwegian supply remains supportive, with nominations around 339 mcm/day and UK receipts boosted by additional Vesterled flows, while LNG send-out has risen to about 98 mcm/day, helping to cushion system balances. Further out, the curve softened only modestly: Summer 26 eased to around 70p/therm, while Winter 26 held above 73p/therm as the storage deficit continues to underpin longer-dated risk premia.
UK power moved in the same direction on the prompt, with easing demand expectations and improving wind forecasts pulling prices lower after Friday’s fuel-led surge. Day-ahead baseload was around £101/MWh on Friday and edged down in early trading as near-term temperatures looked less severe. Last week’s strength was driven by low wind and a heavier reliance on gas-fired generation, with CCGT output rising to 16.2GW and accounting for more than 40% of the generation mix while wind averaged roughly 9GW; with wind output expected to recover this week, gas-for-power burn should ease and system margins should loosen. The forward power curve was steadier than the prompt: Summer 26 eased to around £73/MWh while Winter 26 stayed above £80/MWh, supported by carbon and ongoing availability concerns across nuclear fleets. Several UK units remain offline, and reduced French availability following storm-related disruption has also tightened Continental margins, keeping interconnector-linked support in the background even as the prompt market retraces.
Across the wider complex, macro and geopolitics remained a key influence. Trump’s announcement of new tariffs affecting the UK and several EU member states - linked to Greenland-related political pressure - added to risk-off sentiment, with markets wary that any hit to growth could soften industrial demand expectations further along the curve. Carbon drifted lower alongside the softer gas and power complex, with EUAs around €92/tonne and UK ETS weakening more sharply to around £71/tonne. Oil was broadly range-bound, with Brent near $64/bbl as Middle East risk premia eased on indications of no imminent US military intervention, while coal was marginally firmer, with API2 Cal 27 close to $98/tonne.