Parts of Europe show the first signs of net storage withdrawal (signalling the onset of the heating season)

GAS

France and Germany recorded their first net storage withdrawals this week, on 19th and 20th October respectively – so, withdrawals exceeded injections, given increased demand versus stretched supply.

Whilst European storage as a whole is at 75% versus the 5-year average of 85%, France in particular is coming up well short of historical precedent (another problem facing Macron over the coming months):

As long as traffic in the Strait of Hormuz remains practically at a standstill, competition with Asia will inevitably limit European LNG imports.

Under these conditions, it’s impossible for market participants to initiate a downward correction – despite overbought and divergent levels for front-end delivery. See Quarter-Ahead chart below showing RSI (Relative Strength Index) turning downwards versus price continuing to rise – this augurs a trend reversal, and reflects a slowing momentum to the bull rally:

The US State Department has ordered some diplomats and their families to leave Saudi Arabia amid escalating Houthi attacks. Three people were killed this week in strikes across the country, with two deaths caused by debris from a drone intercepted during an attempted attack on an oil field, and one in a strike at King Fahd International Airport in Dammam. With escalations ongoing, an inevitable risk premium persists across markets, and prices continue to over-react sharply to conflict headlines and fears of supply shortages.

Speculative interest in TTF (the very liquid European gas benchmark) remains net long, with this week seeing renewed interest amid Trump’s Iranian impasse and worries over the Bab-el Mandeb Strait:

And so, little has changed this week versus last week – though forward prices have risen as we’re moving deeper into winter conditioning:

Monthly Day-Ahead Averages for October so far are at 198p/therm (or 6.7p/kwh exc non-gas) – having surpassed last month’s final number:

Monthly Forwards at the front-end are at a 179% premium to offers at the back end of the curve (reflecting the degree of speculative froth we’re contending with right now):

ELECTRICITY & CARBON

Electricity Seasonal Forwards remain at a comparative discount to gas (see value chart below), reflecting the increasingly unrealistic premiums being assigned to fossil fuel transit/supply risk as the winter deepens:

On the Carbon side of things, mid-price Dec-26 UKA delivery sits at at £64.13/tn (and the spot is at mid 63s) – with UK CBAM imminent for Jan ’27, EUA/UKA linkage looks increasingly likely (which will inevitably mean UKA prices will need to rise to parity):

Solid value persists further down the curve, with Summer-28 delivery onwards having been significantly less impacted by the current energy crisis over the past 6 months:

UK electricty Monthly Day-Ahead Averages for October so far are at £147mwh (or 14.7 p/kwh exc non-energy) – having surpassed last month’s final number: