Energy Market Report - 31 July 2026
European energy markets pulled back on Thursday as cooler weather and a modest improvement in supply allowed traders to unwind part of the risk premium built up during a month of escalating conflict between the United States and Iran, though the retreat proved short-lived and prices firmed again into Friday. Gas and power both fell along the forward curve, crude extended its decline for a second session, and carbon eased in both the European and UK schemes.
Natural Gas
Gas prices fell because the weather stopped helping the bulls, not because the geopolitical risk resolved. Temperatures across Northwest Europe eased from recent highs, trimming the cooling load that has driven gas-fired generation through July, while European LNG terminal nominations climbed to 222 mcm/day, well above the month-to-date average of 207 mcm/day, and Norwegian exports rose to 327 mcm/day. NBP day-ahead settled at 141.25 p/therm, down 5.60 p/therm, with the front-month August contract at 140.75 p/therm and Winter 26 at 142.14 p/therm, both off around 3 to 4 per cent. TTF fell 3.7 per cent to €58.43/MWh. The bullish backdrop remains firmly in place, however. EU storage was around 55 per cent full on 28 July, roughly 11 percentage points below the year-ago level, and LNG imports have averaged just 0.29 bcm/day this month against 0.40 bcm/day a year earlier. Set against that, the week did bring the first Qatari export cargo through the Strait of Hormuz since 5 July, alongside a drone attack that set fire to two gas vessels at Egypt's Damietta port near the Suez Canal, a reminder that the risk has broadened well beyond the Gulf. On the UK system, Friday opened 4 mcm/day long, with Norwegian flows steady near 69 mcm/day and LNG sendout unchanged at 9 mcm/day.
Electricity
UK power split between a firmer prompt and a softer curve. Day-ahead baseload rose £8.30/MWh to £132.17/MWh as wind generation ran well below seasonal norms, leaving CCGTs as the largest source of generation at an average of 8.4 GW, or 27.3 per cent of the mix, against just 5.6 GW from wind. Very strong midday solar pushed day-ahead peak to £121.44/MWh, below the baseload price, an inversion that persists while summer daylight suppresses daytime blocks and reverses as the days shorten. Intraday volatility was pronounced, with Friday's system price reaching £188.00/MWh shortly after 06:00 before collapsing to £99.13/MWh an hour later as solar output ramped. Along the curve, contracts tracked gas lower, with Winter 26 baseload down £2.85/MWh to £121.15/MWh, Q4-26 at £123.43/MWh and Cal 27 at £91.95/MWh, each around 4 to 5 per cent lower on the week. Nuclear availability remains constrained, with Heysham, Hartlepool and Sizewell B units offline and a planned 640 MW outage beginning at Torness 2 on Friday, though the operator expects overall availability to improve next week. On the continent, French nuclear output stayed below seasonal norms, keeping German day-ahead baseload at €148.59/MWh.
Other Commodities
Crude fell for a second consecutive session, with Brent settling at $89.03/bbl, down 1.9 per cent on the day and 11.6 per cent on the week, and WTI at $83.59/bbl, as increased tanker traffic through the Strait of Hormuz eased fears of a physical supply interruption. The divergence between falling oil and elevated gas is instructive: the market is treating this conflict primarily as an LNG shipping problem. Coal was unchanged in all but name, with API2 ARA Cal-27 at $124.28 per tonne. Carbon softened, with EUA Dec 26 down €0.73 to €81.29 per tonne and UK ETS Dec 26 off £0.25 to £59.24 per tonne, leaving UK allowances at a discount of roughly €12 per tonne to their European equivalent once converted. In global gas benchmarks, JKM slipped to $21.38/MMBtu while Henry Hub firmed to $2.65/MMBtu, an arbitrage that continues to pull US cargoes towards Europe. Sterling strengthened 0.7 per cent against the dollar to 1.3464 and was broadly flat against the euro at 1.1667, offering UK buyers a modest offset on dollar-priced fuel imports.