Energy Market Update - 26 January 2026
Gas and power rose on the prompt as a US cold snap squeezed LNG availability; softer curves and drifting carbon tempered gains, while low European storage maintained a supportive tone.
UK natural gas strengthened at the front of the curve as weather-driven supply risks rippled through LNG. Day-ahead NBP traded around 108 p/therm, up from Friday’s 102.75 p/therm, with spot and front-month firmer while seasonal strips eased slightly. Fundamentals were mixed: the UK system opened roughly 16 mcm long as LNG send-out climbed to about 116 mcm/day on active schedules at Isle of Grain and South Hook. Norwegian exit nominations were steady near 339 mcm/day, though an unplanned issue at Åsgard trimmed capacity. Across Europe, storage sat around 45.6% - the lowest for late January since 2022 - with withdrawals running at the fastest five-year pace, keeping risk premia in place. The US arctic freeze propelled Henry Hub above $30/MMBtu and tightened the global spot pool, prompting Europe to bid up for flexible cargoes. The IEA expects Europe to import a record >185 bcm of LNG this year to rebuild inventories and sustain flows to Ukraine, though further along the curve Summer-26 eased to about 74 p/therm as immediate tightness outweighed longer-term fundamentals. Diplomacy offered limited relief: Russia-Ukraine talks in Abu Dhabi saw little progress, leaving supply-security assumptions unchanged.
UK power tracked the gas-led rally at the prompt. Day-ahead baseload opened near £97/MWh, above Friday’s £92.26/MWh, despite robust weekend wind that averaged ~20 GW and supplied over half of GB generation, holding gas-for-power near ~5.5 GW. Forward pricing was more resilient: February baseload edged up to roughly £111.50/MWh as participants positioned for possible cold snaps and wind variability. On the continent, improved French nuclear availability - output rose to ~50.8 GW after two units returned - eased pressure on interconnector imports to GB. Domestically, several UK nuclear outages, including at Heysham and Torness, kept baseload margins reliant on CCGT and cross-border support. Longer-run policy signals remained constructive for supply diversification after nine North Sea nations, including the UK and Norway, pledged fresh investment into the offshore wind supply chain, though the benefits will accrue over a multi-year horizon.
Other commodities were mixed. Brent crude firmed to $65.88/bbl amid ongoing Middle East tensions and Iranian-related uncertainty, even as physical indicators suggested adequate near-term supply. API2 Cal-27 coal ticked up to $99.12/tonne. Carbon weakened: EUAs settled at €88.40/tonne and UKAs at £68.32/tonne, with softer equities and unease over US trade policy weighing on sentiment; the UKA-EUA spread was broadly stable. In the US, the deep freeze strained grids - PJM declared emergency conditions - as gas production curtailments lifted domestic prices and complicated LNG export availability. Policy shifts also shaped risk assessments: the new US administration cancelled nearly $30 bn of previously approved federal energy loans and placed a further $53 bn under review, redirecting support toward gas and nuclear and cutting around $9.5 bn earmarked for wind and solar. Meanwhile, analysts flagged that sustained early-season withdrawals - running near 730 mcm/day - could leave EU storage near 20% by end-winter, intensifying summer injection needs and the market’s sensitivity to geopolitical outcomes.