Aug26 Energy Market Brief

July was a one-way market until the very end of it. NBP day-ahead gas finished the month roughly a third higher, forward power went with it, and it took a single announcement from Washington to unwind any of it.

June had been a month of two halves. July only changed its mind once, and left it very late to do so. Gas opened at 107p per therm, climbed for three weeks on one geopolitical headline after another, peaked near 150p and gave back only a fraction of that. Anyone who looked away for a fortnight came back to a different market.

Annual Gas Prices

The month started quietly enough. NBP day-ahead settled at 107.00p on 3 July and eased again to 104.40p on the 6th, which turned out to be the low of the month. Norwegian exit nominations were running above 328 mcm per day and the UK system was opening long most mornings. There was nothing in the fundamentals to suggest what came next.

What came next was the Strait of Hormuz. Iran’s Revolutionary Guards fired on commercial shipping on the night of the 6th, and the market repriced immediately. Day-ahead was back at 117.25p by the 8th and 121.50p by the 9th, helped along by unplanned outages at Ormen Lange and Oseberg that pulled Norwegian nominations down to around 315.8 mcm per day. A brief pause on the 10th took the prompt back to 117.30p, and that relief lasted a weekend. US strikes on Iranian targets were followed by Iranian attacks on Bahrain, Kuwait and Jordan, Tehran declared the Strait closed, and the curve went straight back up.

From there it was relentless. A proposed 20% transit fee on Hormuz shipments lifted the prompt to 129.00p on the 14th, and although the proposal was pulled the same session the buying did not stop. The 15th brought 132.25p and a TTF day-ahead of €54.47/MWh, its strongest since 30 March. A Russian drone strike on Ukrainian gas infrastructure and two oil tankers hit in the Strait pushed day-ahead up 5.8% to 139.50p on the 17th, and by the 23rd it settled at 149.25p, a little over 40% above where the month had bottomed.

The turn arrived on Monday 27 July. President Trump called off an imminent strike on Iran, Brent dropped 8.42 dollars in a single session, and gas followed it down to 135.75p by the Tuesday close. It did not stay there. European LNG arrivals for July came in at 8.91 bcm, around 18% below June and 28% below July 2025, and the prompt jumped back to 146.85p on the Wednesday before settling the month at 142.00p, up 35p.

The important detail for buyers is where that increase landed. Winter-26 rose from 110.97p to 143.31p, a gain of 29%, while Summer-27 moved from 80.21p to 93.39p, up 16%. The step down between the two widened from roughly 31p at the start of July to close to 50p by the end of it. The market did not reprice the whole curve, it repriced this coming winter, and it did so because storage is the one fundamental that has genuinely deteriorated. EU inventories reached only 57.11% by the start of August, around eleven percentage points behind the same point last year, with injections running about 20% below the July 2025 rate. Britain has almost no cushion of its own, with Rough and Humbly Grove both recorded at zero and Hornsea finishing the month at 34%. Norwegian pipeline flows held up well throughout, which is precisely why the market kept bidding winter rather than the prompt.

Annual Power Prices

Power tracked gas up the curve but the prompt was far noisier, and the reason was almost entirely domestic. Weekday day-ahead baseload started July around £98 to £99 per MWh, reached £133.00 on 15 July, which was the high of the month, then fell away to £108.19 on the 31st, an 18% drop in a single session as strong wind and elevated solar squeezed gas out of the stack. Day-ahead peak fell harder still to £81.27, below baseload, which only happens when solar is doing the work in the middle of the day.

None of that volatility should distract from the forward curve, which moved steadily and in one direction. Winter-26 baseload rose from £99.60 per MWh to around £121, up better than a fifth, Q4-26 went from £100.83 to roughly £123, and Winter-26 peak finished near £143. Summer-27 baseload climbed more modestly, from £75.73 to a little over £83. The pattern is the same as gas. The nearest winter carried the increase.

Nuclear availability is the reason. Both Sizewell B units, Hartlepool 1 and Heysham 1 unit 2 were offline through most of July, and Heysham 2 unit 7 went to a full 660 MW unplanned outage from the 20th for 33 days, taking around 3.1 GW of firm baseload out of the system. Torness 2 came off for 18 days from the 31st, and France was no better, with Chooz 2 and Golfech 2 both held out because river temperatures were too high for cooling. Wind ran below seasonal norms for much of the month and dropped as low as 3.1 GW on 15 July. When the wind stops and a third of your nuclear is missing, the price is set by gas plant, and balancing costs hit £220 per MWh on the tightest evenings.

Oil, Carbon and the Wider Picture

Brent was the cleanest read on the whole month. It settled at $72.12 a barrel on 3 July and $100.69 on the 23rd, an increase of nearly 40% driven almost entirely by the Strait of Hormuz. It then fell to $84.09 by the 28th once the strike was called off and recovered to $90.12 by the close, leaving it 25% higher on the month. OPEC+ added another 188,000 barrels per day from August, its fifth consecutive increase, and it barely registered against the security premium.

Carbon went nowhere by comparison. EUA December allowances began the month at €80.60 a tonne and ended it at €81.26, while UK ETS rose from £56.33 to £59.09 and held its persistent discount to the European scheme. Coal API2 for Cal-27 added 11% to $124.91 a tonne. The move worth noting was Asian LNG, where JKM climbed 32% to $21.45 per MMBtu, which keeps Asia in the running for flexible cargoes and caps how much relief Europe can expect.

For businesses coming up to renewal, July is a straightforward lesson in why the day you fix matters. A price taken on 6 July and one taken on 23 July are separated by more than 40% on the prompt, and neither of those days looked especially remarkable at the time. The shape of the curve is now doing a lot of work too. That 50p per therm gap between Winter-26 and Summer-27 means a single fixed price on a two or three year deal averages one very expensive winter across two much cheaper years, which is an argument for splitting the volume rather than fixing it all in one go. On power the near curve is where the pressure sits, with close to 1.9 GW of nuclear coming off through August as Hartlepool 2, Heysham 1 and Torness 1 go into outage in succession, so anyone renewing electricity in the next few weeks is buying into a firming market whatever the day-ahead print says. The wildcard remains Iran, where talks carry no deadline and the premium that left the market in one session on 27 July can go back in just as quickly. As ever, if you would like to talk through what this means for your own contracts, our energy consultants are happy to help.