Energy Market Report - 25 August 2026
Energy markets pushed higher again on Monday, with the arrival of a long-signalled US sanctions package against Iran overriding a set of physical fundamentals that would otherwise have argued for softer prices. Gas and power both gained, carbon added to generation costs, and crude was the one significant mover in the opposite direction.
Natural Gas
The direction of travel is being set in Washington and Tehran rather than by the weather. Temperatures across North West Europe remain above seasonal norms and are forecast to stay there, demand is seasonally weak, and LNG arrivals into the region are healthy, yet UK NBP day-ahead settled at 166.15 p/therm on Monday, up 2.15 p/therm and the highest close since January 2023, with TTF day-ahead at €68.22/MWh reaching a comparable milestone. The move was larger further out: the September contract gained 5.62 p/therm to 168.20 p/therm and Winter-26 rose to 169.76 p/therm, taking it roughly 24 per cent higher than it was at the start of August. What the market is pricing is supply adequacy through the delivery season rather than a cold snap, and the evidence sits in the shape of the curve, where the fourth quarter now carries a premium to the first quarter of next year. EU storage stood at 62.6 per cent on Monday, close to 13 percentage points below the same point last year after a summer of repeated continental heatwaves, and the UK's own storage capacity is limited by comparison. On the supply side, Gassco nominations eased to 337.7 mcm/day with flows to the UK down around 7 mcm/day as Langeled reduced, UKCS output slipped to 88.6 mcm/day, and LNG sendout held flat at roughly 8 mcm/day with one cargo confirmed into Milford Haven tomorrow. Norwegian exports should stay above 330 mcm/day until the next maintenance round starts on 29 August.
Electricity
Power rose alongside gas, with the prompt moving more sharply than the curve after a week of weak wind output forced grid operators onto gas-fired generation. UK day-ahead baseload settled at £131.47/MWh, up £11.48/MWh on Friday, while day-ahead peak jumped £22.09/MWh to £120.30/MWh. The forward curve set fresh highs, with the front quarter at £139.29/MWh, Winter-26 at £138.50/MWh and Calendar 2027 baseload at £103.90/MWh, its strongest level since 2023. Underlying availability was reasonable: nuclear output recovered to around 4.3 GW, a four-month high, as Hartlepool 2 returned from planned works, though Torness 1 and one Heysham 1 unit remain offline and a further 660 MW leaves the system when Heysham 2 unit 8 begins an 80-day outage on 4 September. Wind recovered to roughly 8 GWh/h and interconnectors continued to import. Continental conditions offered support, with French nuclear stable near 41 GW and Hungary restarting around 1 GW at Paks. The intraday picture remains volatile: Monday saw prices fall to £14.22/MWh in the early afternoon as solar peaked before rebounding to £200/MWh on the evening ramp, and the two preceding days both saw outright negative pricing.
Other Commodities
Crude fell as traders concluded that the sanctions detail, which stopped short of the largest Chinese banks, was unlikely to remove Iranian barrels from the market at the pace the rhetoric had implied. Brent M+1 dropped $2.22 to $92.17/bbl and WTI M+1 fell 2.35 per cent to $85.01/bbl, easing further into Tuesday morning. Coal was steadier, with API2 ARA Calendar 2027 adding $0.75 to $129.52/tonne, up 3.6 per cent on the week. Carbon rose on both schemes and fed directly into generation costs, with EUAs for December-26 gaining €1.19 to €83.80/tonne and UK ETS December-26 up £1.09 to £60.58/tonne, leaving the UK allowance at a discount of roughly €13/tonne to its European equivalent. In global LNG, JKM M+1 rose $0.57 to $23.51/MMBtu, holding Asia at a slim premium to European spot at around $22.65 to $23.32/MMBtu, while Henry Hub spot was effectively unchanged at $2.83/MMBtu and the transatlantic arbitrage stayed comfortably open. Sterling firmed slightly against the euro at 1.1689 and was flat against the dollar at 1.3630.