Geopolitics, not weather, drove a sharp repricing of European energy on Wednesday, after reports that Washington had urged Gulf allies to prepare for possible military action against Iran following next week’s US midterm elections. Gas and power both surged, with UK day-ahead gas breaking 250 p/therm for the first time in close to four years and crude extending gains, although much of the move has unwound this morning as diplomatic contact with Tehran resumed.
Natural Gas
Gas rallied on supply risk layered onto an already fragile physical position, with day-ahead NBP settling up 12.00p at 250.00 p/therm and the Dutch TTF front-month clearing €100/MWh for the first time since December 2022, up €4.48 at €100.30/MWh. Norwegian availability remains the binding constraint: unplanned outages at Kårstø and Kollsnes cut capacity by 7.6 mcm/day and 10.6 mcm/day respectively, total curtailments reached 46.8 mcm/day on Wednesday before easing to 36.2 mcm/day today, and Åsgard and Oseberg will stay partially curtailed into early next week, though exit nominations have held at 329.4 mcm/day and 337.2 mcm/day this morning. UK system demand rose to 191.74 mcm/day, LNG send-out totalled around 19 mcm/day across Isle of Grain, Dragon and South Hook, and six cargoes are booked into UK terminals over the next fifteen days. QatarEnergy extended its force majeure on Edison’s 6.4 bcm per year contract to 30 December and a power outage took all three Freeport LNG trains offline, while European storage at 74.96 per cent is the weakest late-October level since 2009, with the UK at only 41.31 per cent. Prices have retreated this morning, with day-ahead offered near 238.52 p/therm, as temperatures are forecast to fall back towards and through seasonal norms from the weekend.
Electricity
Power firmed because a collapse in wind output coincided with rising fuel costs, leaving gas plant setting price for far longer than usual. Day-ahead baseload settled up £38.00 at £213.00/MWh with peak at £225.66/MWh, as wind fell from 52.7 per cent of the generation stack to 36.6 per cent and towards 20 per cent by evening, while gas-fired output rose from 16.9 per cent to 29.6 per cent. Intraday system prices averaged £201.91/MWh and peaked at £261.80/MWh in the early evening, and the overnight negative prices seen earlier in the week did not recur. Generation margins are tight regionally: UK nuclear is carrying roughly 1.1 GW of outages with a heavy January programme ahead, Drax has withdrawn its 645 MW biomass unit for the whole of Q1 2027, French November nuclear unavailability stands at 14.1 GW with low Rhône flows threatening restrictions at Saint-Alban from Sunday, and Alpine and Nordic hydro stocks are well below norms. German and Dutch day-ahead baseload settled at €315.00/MWh and French at €270.00/MWh, comfortably above the UK equivalent, so Britain is exporting at the margin. Along the curve November baseload closed at £198.54/MWh and Calendar 2027 at £148.99/MWh, up 16.64 per cent and 5.97 per cent respectively on the week, with day-ahead offered back near £202/MWh this morning.
Other Commodities
Crude rose with the escalation risk before reversing, Brent settling at $115.32/bbl, up 5.97 per cent on the week, and WTI at $102.78/bbl, up 5.80 per cent, before both eased this morning on reports that the US Vice President had contacted Tehran directly and Qatari mediators had tabled a new peace proposal, which Iran has rejected while leaving the door open. Coal moved against the trend, with API2 ARA Cal 2027 settling at $145.82 per tonne, higher on the day but down 0.56 per cent on the week, and the 2028 and 2029 contracts also softer. Carbon firmed alongside gas, with EU allowances for December 2026 up €1.05 at €89.10 per tonne and up 3.71 per cent on the week, and UK ETS allowances up £0.59 at £65.77 per tonne, leaving the UK trading at a discount of roughly £8.89 per tonne once converted, slightly wider than the previous session. In global gas benchmarks, JKM front-month added $0.62 to $32.35/MMBtu while Henry Hub spot rose $0.10 to $2.86/MMBtu, a spread that continues to direct US cargoes towards Europe and Asia. Sterling was little changed at 1.1935 against the euro and 1.3325 against the dollar, with no material effect on import costs.