Energy Market Report - 26 August 2026
Reports of progress towards a temporary shipping corridor through the Strait of Hormuz sent risk premium out of energy markets on Tuesday, ending a seven-session rally that had pushed UK winter gas to a three-year high. Gas, power and crude all fell, with only carbon firming against the trend.
Natural Gas
Prompt and near-curve gas sold off through Tuesday afternoon as the geopolitical bid faded and the physical picture stayed comfortable. NBP day-ahead settled at 161.40 p/therm, down 4.75p, while the Winter-26 season lost 4.41p to 165.35 p/therm and Q4-26 fell 4.74p to 167.26. Continental hubs moved in step, with TTF spot at €66.35/MWh and the September contract down 2.5 per cent. Supply is not the problem: Norwegian aggregate flows to Europe eased to 338.5 mcm/day, but UK Continental Shelf production rose to 91.70 mcm/day and linepack built, leaving the system long enough to export via both interconnectors while still injecting into storage. UK LNG sendout is thin, with a single cargo due into South Hook on 27 August, though northwest Europe has ten cargoes scheduled in over the next week. The standing bullish factor is European storage at roughly 62 to 63 per cent full, well below this point last year and among the weakest readings for late August in recent seasons, which is why winter contracts continue to find support on dips. Forecasts point to above-seasonal temperatures into early October, keeping heating demand muted, while the Cygnus maintenance programme from 31 August and IUK export maintenance from 1 September pull in opposite directions on the prompt balance.
Electricity
Power fell across the curve on weaker gas and recovering renewables, though the front of the market split sharply. Wind output roughly doubled day on day to between 9.4 GW and 11.2 GW depending on the metering basis, cutting gas-for-power demand by around 35 per cent, yet day-ahead baseload still firmed £8.71 to £140.18/MWh on a very tight evening block. Day-ahead peak rose £14.61 to £134.91/MWh, leaving peak below baseload as strong midday solar hollowed out the middle of the peak window. Further out, Q4-26 baseload fell £4.21 to £135.08/MWh, Winter-26 £3.27 to £135.23 and Calendar-27 1.6 per cent to £102.20/MWh. Nuclear availability is the risk to watch, with Hartlepool 1 offline since late May, Hartlepool 2 coming off unplanned on Tuesday, and planned outages at Heysham 1, Heysham 2 and Torness stacking up through the first week of September. Continental markets diverged: German and Dutch contracts drifted lower with gas, while the French September contract jumped 7.9 per cent to a record €113.27/MWh after nuclear unavailability for late August was revised up by around 3 GW and the Cattenom 4 outage was extended to mid September.
Other Commodities
Brent front-month fell $3.59, or 3.9 per cent, to $88.58/bbl and WTI dropped 3.1 per cent to $82.36/bbl, with the market putting more weight on the prospect of a workable Hormuz transit arrangement than on Washington's fresh sanctions package announced on Monday, which targets close to 60 entities linked to Iranian oil, weapons and cyber operations. Coal followed, with API2 ARA Cal-27 down $2.53 to $126.99/tonne, though the curve remains higher on the week. Carbon went the other way: EUA Dec-26 added €0.62 to €84.42/tonne and UK ETS Dec-26 rose £0.38 to £60.96/tonne, both up more than two and a half per cent on the week, leaving UK allowances at a discount of roughly €13/tonne to their European equivalent and keeping a floor under thermal generation costs. LNG benchmarks eased at the margin, with JKM front-month down $0.19 to $23.32/MMBtu, northwest European LNG at $20.49/MMBtu and Henry Hub flat at $2.77/MMBtu. Sterling was unchanged against the euro at 1.1689 and marginally firmer at 1.3649 against the dollar, so currency was not a factor.