Energy Market Report - 25 March 2026
Energy markets sold off sharply yesterday as reports of a US diplomatic initiative towards Iran shifted risk sentiment across gas, power and oil. A surge in GB wind generation compounded the move, crushing day-ahead power prices and reducing gas-for-power demand.
Natural Gas
Gas prices fell heavily on Tuesday as markets priced in the possibility of a diplomatic resolution to the Middle East conflict. Reports that Washington had presented Tehran with a 15-point peace proposal triggered a wave of selling across the curve, with the NBP front month dropping to around 125.70p/therm by this morning - down roughly 10.70p/therm from Tuesday's settlement of 136.35p/therm. TTF followed a similar path, with the spot contract settling at €52.52/MWh on Tuesday before losing a further 4 to 5 per cent into this morning. Day-ahead contracts have now fallen for three consecutive sessions from the highs reached after the attacks on Qatar's Ras Laffan terminal, with TTF having peaked near €61/MWh on 19 March. The physical picture remains comfortable but not loose - UK system demand rose to around 212 mcm/day as temperatures dipped below seasonal norms, while Norwegian flows were steady with Langeled at 54 mcm/day and Vesterled at 12 mcm/day. LNG send-out across the three UK terminals totalled around 74 mcm/day, and the system opened 14 mcm long. European storage remains the structural concern, however, with continental stocks sitting at around 28.4 per cent - well below the 33.8 per cent recorded on the same date last year. The inverted summer/winter structure on the TTF suggests the market does not yet see a clear path to comfortable restocking ahead of the injection season.
Electricity
Day-ahead baseload collapsed on Tuesday, settling at just £40.72/MWh - down nearly £32 from the prior session - as GB wind output surged from 7.9 GW to 21 GW, pushing renewables to around 64 per cent of total output and cutting CCGT utilisation to roughly 8 per cent. Day-ahead peak was similarly soft at £41.30/MWh, virtually flat to baseload and reflecting the depth of oversupply across settlement periods. Along the curve, the front month broke below the key £100/MWh support level to trade near £95 by this morning, while Sum-26 baseload dropped to around £95.50 and Win-26 to roughly £105. Nuclear availability remains under pressure, with unplanned outages at Heysham 1 and Heysham 2 ongoing and multiple planned outages scheduled from April at Torness and Sizewell B. Wind forecasts suggest output will moderate over the coming days before settling at reasonable levels through late March.
Other Commodities
Brent crude settled sharply higher on Tuesday at $104.49/bbl, up $4.55 on the day, driven by the fresh exchange of airstrikes between Israel and Iran. However, oil reversed this morning as the US peace proposal shifted sentiment. Carbon bucked the broader energy sell-off, with EUA Dec-26 rising nearly €2 to €71.22/tonne on optimism that a ceasefire could support industrial output, while UK ETS Dec-26 gained around £1 to £38.91/tonne. Coal eased modestly, with ARA CIF Cal-27 settling at $129.05/tonne, down about 1 per cent on the day. Elsewhere, Russian strikes damaged a key power interconnector between Ukraine and Moldova overnight, prompting Moldova to declare a state of emergency over power supply - a reminder of the operational risks from the eastern European conflict that could tighten continental balances if further infrastructure is affected.
Outlook
The market is caught between de-escalation hopes and the reality that the conflict persists. Iran has publicly denied any talks are taking place, and Israeli-Iranian airstrikes continued this morning, keeping the situation fluid. European storage at around 28 per cent and the structural loss of Qatari LNG volumes continue to keep a floor under gas prices, meaning any breakdown in the diplomatic push could see the front of the curve reprice rapidly. Near-term direction hinges on whether the 15-point plan gains traction, how wind performs through the remainder of the week, and whether the growing probability of an El Nino event begins to factor into summer power pricing.