Energy Market Update - 27 January 2026
Prices reversed lower as milder demand forecasts and improving wind outlooks loosened the near-term balance, despite ongoing concern about US LNG feedgas disruption and a continued geopolitical risk premium.
European and UK gas prices softened after an initially firmer open as demand expectations turned weaker and supply looked comfortable. The UK NBP day-ahead settled at 101.30p/therm after early offers near 105p/therm, while worries lingered over reduced US LNG feedgas during a deep freeze and a sharp rise in Henry Hub narrowing the European arbitrage into February. UK fundamentals remained supportive: Norwegian flows held near 339 mcm/day despite issues at Asgard, National Gas forecast demand falling to 275 mcm/day versus a 305 mcm/day seasonal norm, and LNG arrivals stayed strong with twelve cargoes expected by early February. The curve eased as near-term demand revisions removed some winter risk premium, with Summer 26 below 72p/therm and Winter 26 near 74p/therm, while EU storage at 45.5% provided a buffer but remained weather-sensitive. The EU’s plan to end Russian gas and LNG by late 2027 added a firmer medium-term policy backdrop.
Power followed gas lower on the prompt, but tighter system conditions limited the downside as wind output fell. Wind generation dropped to 12.7GW from 20.4GW, pushing gas-fired plant back above 40% of the mix and reinforcing fuel-driven pricing. UK day-ahead baseload settled at £96.29/MWh, though morning offers lifted towards £115/MWh, and peak prices held firmer on tighter evening margins. Further out, February baseload eased to £105.60/MWh but stayed supported above £100/MWh on residual gas strength and ongoing LNG uncertainty, while the drop in EUAs reduced immediate thermal costs. Wind forecasts remain elevated through the coming week before easing in early February, keeping prompt volatility in play around the month-end turn.
Other commodities were mixed, with crude steady-to-lower while carbon weakened on softer load expectations. Brent settled at $65.59/bbl, edged down as Kazakhstan signalled a return to output at its largest field and US refining slowed after storm disruption. Russian crude flows stayed under scrutiny after Indian buyers stepped back from sanctions-exposed cargoes, contributing to higher floating storage and tighter enforcement risk following a reported Mediterranean seizure of a shadow fleet tanker. Carbon fell with EUAs down 1.3% to €87.13/tonne and UK allowances to £66.55/tonne as weather-driven demand eased. Geopolitical risk premiums persisted amid inconclusive Russia-Ukraine talks and heightened Persian Gulf tensions, with any disruption near the Strait of Hormuz a key sensitivity for LNG and broader energy flows.