Fri, 2nd Oct ’26

GAS

All noise aside, Monthly Forwards are up all the way down the curve versus 1-month ago:

With Winter-26 now upon us (beginning yesterday), the front season is now Summer-27. Of course, summers are ordinarily lower cost than winters – however, Summer-27 remains more expensive to buy than Winter-27 (this condition began a month or so ago):

Summer-28 onwards remains at a significant discount to front-end prices – accordingly, we’re seeing an increasing proportion of clients beginning to hedge volumes for these periods of delivery given the values on offer down the curve.

This week has seen little in the way of price action – it’s been mostly sideways consolidation whilst the world waits to see if the Strait of Hormuz will re-open in advance of the US congressional mid-terms in a month’s time.

Trump’s approval rating is languishing down at 32%, and on paper, it looks as though the Democrats will take both houses back off the Republicans come 3rd Nov – if Trump is worried about potential humiliation/impeachment, he’s not showing it. Instead, he’s alluded this week at further military strikes AFTER the mid-terms. Should they retake the majority (as is widely anticipated), we’d think it unlikely that the Democrats would get behind such a plan!

And so, all the markets can do is wait and see.

For the second week in a row, investment funds have decreased their net long Positions in the TTF (European gas benchmark) – so profit-taking persists, but more importantly, bullish fervour has dissipated amid an underlying sentiment that Trump’s ability to wage war (and incite global discord in the interests of US protectionism) is losing steam.

Nonetheless, the Strait of Hormuz remains closed, and LNG flows from the Gulf into Asia remain at a trickle – meaning Europe’s storage injections are little changed on the week (now at 72% versus the 5-year average of 91%).

Thankfully, strong Norwegian pipeline flows into Europe/the UK (at 17% above the 5-day moving average) are keeping a lid on short-term supply worries amid soft demand which is 30% below the 5-year seasonal average.

Monthly Day-Ahead Averages for September finished at 187p/therm (or 6.4p/kwh exc non-gas) – the highest levels since Dec ’22, post Ukraine invasion.

ELECTRICITY & CARBON

Far-curve Forward prices (available to secure now) are at almost a 60% discount versus Winter-26 delivery – this reflects the market’s underlying hopes that life will return to normal beyond the November mid-terms.

Electricity remains at a comparative discount to gas, this is down to solid renewables outputs limiting gas for power burn over the summer months – though of course this will change when the days get shorter and the wind drops (usually around mid-November).

On the Carbon side of things, mid-price Dec-26 UKA delivery sits at at £60.98/tn (and the spot is at mid 59s) – prices have meandered in a 7% range since early July amid falling gas prices (and the likelihood of industrial demand destruction if prevailing prices remain elevated across the winter).

UK electricty Monthly Day-Ahead Averages for September finished at £134/mwh (or 13.4p/kwh exc non-energy) – the highest level since Feb ’23.

Last week, traders were able to use a welcome dip in prices to further scale-in Winter-26 hedges – this week, it’s been more about scaling-in at the great prices on offer for Summer-28 onwards. As per the volatility indicator below (detailing yesterday’s closing prices versus those printed 2 months into the war), Summer-28 onwards has been significantly less impacted by the closure of the Strait of Hormuz than front-end delivery prices: