Energy Market Update - 28 January 2026
European gas and power softened as the US freeze-driven rally faded, weather models shifted milder, and UK wind output surged, cutting thermal demand despite a year-on-year storage deficit.
European gas prices eased through Tuesday as profit-taking set in and late-January forecasts moved closer to seasonal norms. NBP and TTF weakened into the afternoon, tracking a reversal in Henry Hub after it briefly touched $7/MMBtu before falling back below $6/MMBtu, easing concern over extended LNG export constraints. Supply was steady, with Norwegian nominations around 339 mcm/day and a heavy UK LNG arrival schedule at South Hook, Isle of Grain and Dragon supporting elevated send-out and potentially stronger IUK exports towards the weekend. Further out the curve, the market remained underpinned by low inventories, with pan-European storage near 45% full versus roughly 56% a year ago, maintaining support for seasonal pricing even as demand expectations were revised lower into early February. Traders continue to watch for renewed US LNG feedgas uncertainty and potential stratospheric warming signals that could lift late-February cold-risk.
UK power followed gas lower, with the day-ahead baseload settling at £113.71/MWh. Wind generation jumped to an average 21.5 GW from 12.7 GW the prior day, exceeding 50% of output and sharply reducing gas-for-power demand as CCGT output fell by nearly half. Interconnector flows helped manage system balance, while near-curve contracts were mixed amid weaker clean spark spreads as gas and carbon softened. Nuclear availability remains a constraint versus last year, with extended works at Hartlepool expected to run to month-end. In France, nuclear output stayed stable and EDF signalled repairs at Civaux 1 will be handled during a planned 2027 outage, limiting near-term supply disruption risk.
Elsewhere, Brent rose to $67.57/bbl, up nearly $2, while flat time spreads continued to suggest no acute front-end tightness. EU carbon prices dipped then recovered, with EUAs settling at €88.37/tonne and UKAs edging higher. Geopolitics and policy remained active: the European Commission flagged efforts to diversify LNG supply beyond the US towards Qatar, Canada and North Africa; Germany discussed a €2 billion resilience fund to protect energy infrastructure; and the EU adopted binding measures to end Russian gas imports, targeting Russian LNG in early 2027 and pipeline gas by autumn 2027, with Russia currently around 13% of EU gas imports. In the US, sharp gas volatility reportedly forced short-covering by trend-following funds, amplifying price swings.