Energy Market Update - 29 January 2026
Near-curve risk premia eased as US LNG feedgas recovered, while softer demand expectations and stronger wind forecasts pulled prompt gas and power lower; oil rose above $70/bbl on fresh Iran-related tensions.
European gas prices drifted lower on the prompt despite tight underlying storage. NBP day-ahead settled at 100.50p/therm (down 1.70p), while the TTF front-month was range-bound and closed around €38.62/MWh. UK system demand is forecast to fall by 38 mcm/day, largely from reduced gas-for-power burn as wind output lifts, with supply improving as Norwegian deliveries recover and LNG send-out stays robust near 100 mcm/day; this has kept the system well supplied and sustained an NBP day-ahead discount to TTF. Globally, US LNG feedgas nominations climbed to 16.1 bcf/day as the cold snap eased, helping to cap upside in European hubs, although low inventories keep prompt markets reactive: EU storage was 43.53% full as of 27 January, and colder risks flagged for mid-February remain a key watchpoint. Further out, Summer 26 and Winter 26 gained as traders focused on depleted stocks and the scale of the upcoming injection campaign, supporting seasonal spreads.
UK power tracked gas lower at the front end as improving wind eased residual thermal demand. UK day-ahead baseload fell around 7 per cent to £106.55/MWh, while day-ahead peak dropped to £116.79/MWh. Wind generation was forecast at 11.1 GW on 29 January and higher the following day, reducing near-term system tightness, with interconnector flows and continental hydro helping to manage evening ramps. The forward curve was steadier: Summer 26 baseload edged up to £74.18/MWh and Winter 26 rose to £79.44/MWh, supported by the risk of tighter balancing conditions should temperatures dip below seasonal norms in early-to-mid February, and by broader uncertainty around LNG and European storage. Policy-wise, the UK government confirmed inflation indexation for the Renewables Obligation will move from RPI to CPI from April 2026, a change likely to be monitored for its longer-term impact on renewable support costs.
In the wider complex, Brent crude pushed through $70/bbl after President Trump renewed warnings of potential military action against Iran, reintroducing a geopolitical premium even as time spreads stayed flat-to-weak, suggesting no immediate physical tightness. Carbon moved lower with the softer prompt energy picture: EUAs fell to €86.54/t, while UKAs dropped to £66.76/t, with near-term pricing still dominated by residual load and auction cadence and policy developments shaping the medium-term backdrop. In UK power-market structural themes, negative pricing events are expected to more than double this year as renewables build-out accelerates, with 7.4 GW of new wind and solar due online in 2026; battery commissioning is also expected to reach 9.8 GWh this year, underscoring the growing role of storage in absorbing volatility.