Weekly Energy Market Report - Week 40

Gas rose and fell on alternate sessions and closed 12.00p lower, British storage dropped eleven points to 42%, UK carbon jumped 6.43%, and Oct-26 expired on the final day.

Five settled sessions between 23 and 29 September took NBP day-ahead gas from 185.00 to 173.00 p/therm, down 12.00p or 6.49%, and Nov-26 from 185.69p to 176.53p. UK day-ahead baseload power went from £161.75 to £117.67/MWh. The net figures look like a steady slide. The week was nothing of the kind.

Day-ahead gas changed direction on every one of the five sessions. On 24 September every gas, baseload and peak contract settled higher; on 25 September every one of them settled lower. The 28th took back part of that fall and the 29th took back more than the 28th had gained. Nearly all of Nov-26’s weekly loss came on the final session.

The shape of the market changed too. Oct-26 expired on 29 September, taking Q4-26 and Winter-26 off the board with it, so the coming winter is now priced through Nov-26, Dec-26 and Q1-27. And after a week in which it did not move at all, the winter after this one finally fell.

Gas Market

Day-ahead settled at 182.25p, 190.00p, 179.30p, 180.50p and 173.00p across the five sessions, from a 185.00p start. That is 29.90p of movement for a net fall of 12.00p. Nov-26 followed the same path in larger steps: 182.66p, 190.71p, 183.04p, 185.63p and 176.53p. At the close of 28 September it stood just 0.06p below where the week began; the 9.10p it lost on 29 September was, in effect, the week.

The front of the winter fell furthest. Nov-26 lost 9.16p or 4.93%, Dec-26 9.04p or 4.82% and Q1-27 7.91p or 4.32%. Further out, Summer-27 lost 2.80p to 128.06p and Winter-27 3.65p to 124.01p. The two 2028 contracts barely moved: Summer-28 fell 0.45p to 81.75p and Winter-28 finished 0.26p higher at 88.95p.

Winter-27 is the change from last week. It gained 0.22p across the previous five sessions while the coming winter lost about 8%, and a week ago this report described the winter after as untouched. This week it fell by more than Summer-27, the first sign that the selling has started to reach beyond the next six months.

With Winter-26 gone, the gap between Q1-27 and Winter-27 is the cleanest read of the two winters. On gas it narrowed to 51.26p from 55.52p, and on power to £41.03 from £43.59.

The 24 September rise came as Norwegian supply hit its low for the window: exit nominations for that gas day settled near 221 mcm/day, and both Norwegian pipes into Britain read zero the next morning. The 25 September fall was put down to mild forecasts and calmer geopolitics. By the end of the week Norway was back: exit nominations reached 311.5 mcm/day on 30 September and Langeled was delivering 42.00 mcm/day into Britain.

Britain lost its place as the cheapest of the seven European hubs. It was cheapest on the 23 and 28 September settlements and not on the other three. On 29 September every hub fell and NBP fell least, so it closed the week 1.72p above France’s PEG and just 0.74p under the Dutch TTF, against 2.10p under TTF a week earlier.

The card below summarises where NBP contracts stood after the five settled sessions of this period.

Electricity Market

Day-ahead baseload settled at ┬ú152.55, ┬ú161.23, ┬ú130.14, ┬ú137.00 and ┬ú117.67 across the five sessions, averaging ┬ú139.72/MWh against ┬ú120.67 the week before, up 15.79%. The range was ┬ú43.56, a quarter of the previous week’s ┬ú170.43. A calmer prompt, even with the average higher.

Peak averaged £134.06 against £106.76 the week before, up 25.57%. It settled below baseload on three of the five sessions, the widest gap £25.21 on 25 September, and closed the week £9.66 above it at £127.33.

The forward power curve fell less than gas. Nov-26 baseload lost £4.28 or 2.85% to £145.85 and Q1-27 £3.11 or 2.09% to £145.91, against falls of 4.93% and 4.32% on the same gas contracts. Summer-27 lost £0.76 to £102.70 and Winter-27 £0.55 to £104.88. Oct-26 baseload expired on 29 September at roughly £140/MWh according to market commentary, against £142.83 at the start of the week.

The imbalance market was quieter than the week before but not quiet. The highest System Buy Price across the seven days was £350.22 on 28 September at 17:44, and the lowest System Sell Price was minus £28.10 on 26 September at 13:14, a spread of £378.32. The previous week ran from minus £50.00 to £594.00.

Nuclear availability improved. Outages fell from 2,725 MW to 2,255 MW when Torness 1 returned, while Heysham 1 reactor 1 had its outage extended to twenty-one days and is still listed at the end of the week.

Oil, Carbon and Global Commodities

Brent recovered part of the previous week’s slide. It closed 22 September at $99.25, rose on the next two sessions to $106.60 on 24 September, and finished at $102.59 on the 29th, up $3.34 or 3.37% on the week. The swings tracked the headlines on Iran: calmer on 25 September, firmer on the 28th after reports that the US had rejected an Iranian proposal to reopen the Strait of Hormuz, and lower again on the 29th.

Commodity	Settlement 29 Sep	Change on the week
Brent Crude M+1	$102.59/barrel	+3.37%
Coal API2 Cal-27	$134.19/tonne	+0.21%
EUA Carbon Dec-26	Ôé¼85.95/tonne	-0.90%
UK ETS Dec-26	£61.86/tonne	+6.43%
JKM LNG M+1	$25.43/MMBtu	-2.38%

The carbon story reversed. Last week the UK allowance fell while the European one rose; this week UK ETS Dec-26 gained ┬ú3.74 or 6.43% to ┬ú61.86, ┬ú2.90 of it on 29 September alone, while EUA Dec-26 slipped Ôé¼0.78 to Ôé¼85.95. At the closing rate of 1.1666 the UK allowance is worth about Ôé¼72.17, a discount of Ôé¼13.78 to the European price against Ôé¼18.97 a week earlier.

Coal API2 Cal-27 ended $0.28 higher at $134.19 a tonne. JKM lost $0.62 to $25.43/MMBtu, but British spot gas fell further, so Asia’s premium over Britain widened to $2.54 from $1.37. Henry Hub rose 28 cents to $3.18. Sterling was steady against the euro at 1.1666 and eased against the dollar to 1.3229 from 1.3339.

Storage and Supply

British storage fell eleven points in a week, from 53% to 42% on the country map. Every continental reading held or rose: France to 81% from 79%, Italy to 86% from 85%, Germany to 57% from 56%, the Benelux labels to 57% and 61% from 54% and 59%, and Spain unchanged at 73%. European storage as a whole is put at roughly 71%.

The draw came out of the salt caverns. Hill Top went from 41% to 3%, Stublach from 79% to 51% and Aldbrough from 57% to 32%. The LNG terminals filled at the same time, South Hook to 77% from 67% and Isle of Grain to 41% from 24%, on the back of cargoes that arrived early in the week. Rough is empty and Humbly Grove sits at 1%.

No British cargo appears on the schedule now. Ten cargoes carrying about 898 mcm are due at northwest European terminals between 30 September and 4 October, seven of them from the United States, and none is bound for Britain. Supply for the coming week rests on Norway, which is close to full strength, and on storage that is being drawn while the continent’s is not.

The Week Ahead and What It Means for Your Business

Last week this report expected most Norwegian maintenance to clear after 23 September. It took longer: exit nominations fell further, to about 221 mcm/day on 24 September, before recovering over the following four mornings to 311.5 mcm/day. The Troll curtailment, extended twice, was down to 12 mcm/day by 30 September and expected back on the day-ahead.

The weather now matters more than Norway. Combined wind and solar output is forecast near 15,400 MWh on 30 September, well above the seasonal norm of about 10,500, then below it every day to 7 October, near 6,300 on 3 October. Temperatures peak near 18.5°C on 30 September and ease to 14°C to 15°C, still above the seasonal mean. Low wind means more gas burned for power, and day-ahead baseload for 1 October is already offered at £160.00.

For fixed-price buyers the week closed with Nov-26 at 176.53 p/therm and £145.85/MWh, and Q1-27 at 175.27p and £145.91, about 6.0 p/kWh for gas and 14.6 p/kWh for power at wholesale, before network costs, levies and supplier margin. Those are the lowest closes of the week on every one of those contracts.

They did not last long, though. Every gas and baseload contract was marked higher on the morning of 30 September, and Nov-26 gas has settled anywhere between 176.53p and 190.71p in six sessions. Fixing business electricity or gas in stages across several dates is what turns that kind of range into an average rather than a gamble on one day.

The UK carbon move deserves attention in its own right. A 6.43% rise in the UK allowance feeds straight into the cost of gas-fired power in Britain, and it has closed more than a quarter of the discount to the European price in a week. Businesses reporting their emissions, or buying power on terms that pass carbon through, should keep an eye on it; our carbon reporting service covers how it lands on your own figures.

To talk through what this week’s moves mean for your own contract dates and consumption profile, speak to one of our energy consultants.

Previous report: Weekly Energy Market Report, Week 39

For the following week’s energy market analysis, read our Weekly Energy Market Report, Week 41.

For more recent analysis, read our Weekly Energy Market Report, Week 42.