Energy Market Analysis – 09/03/2026
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Power
UK baseload power prices surged throughout the week, tracking movements in the gas and carbon markets amid heightened geopolitical tensions. Price action remained volatile, particularly in the short-term contracts, with bullish sentiment extending across the curve. The rally was primarily driven by concerns over Middle Eastern energy infrastructure rather than domestic fundamentals.
European power markets followed similar trajectories, with prices lifting across the curve in response to gas market gains. The benchmark December 2026 EUA carbon contract climbed to €73.93/t on Tuesday, providing additional upward pressure on power prices.
Despite the overall bullish trend, liquidity remained limited throughout the week, particularly at the front of the curve.
Fundamentally, the UK power system showed some variation, with gas-for-power demand forecast to fall by 16 mcm/day on Friday due to increased wind generation, though wind speeds remained below seasonal norms. Temperature forecasts showed milder weather across Northwest and Southern Europe, with UK temperatures expected to reach almost 5 degrees Celsius above the five-year average heading into the weekend, which would typically dampen demand but was insufficient to offset geopolitical risk premiums.
Gas
K NBP and European natural gas prices experienced significant volatility and sustained gains throughout the week, driven primarily by escalating Middle Eastern conflicts rather than fundamental supply-demand dynamics. The closure of the Strait of Hormuz—a critical global energy chokepoint—and QatarEnergy’s announcement that it had halted LNG production at its Ras Laffan terminal following military attacks triggered sharp price increases. Iran’s threats to strike vessels attempting passage through the Strait further intensified market uncertainty.
Despite the geopolitical turmoil, near-term fundamentals remained relatively stable. Weather forecasts showed temperatures across Northwest and Southern Europe consistently above five-year averages, with the UK expecting conditions almost 5°C above seasonal norms.
Norwegian gas flows showed some fluctuation, with total nominations ranging between 319.6-323.9 mcm/day, affected by minor outages including an unplanned reduction at Oseberg. UK-bound flows increased toward week’s end, with Langeled nominations reaching 67 mcm/day.
EU storage levels declined to 29.76% by 3rd March, below the previous year’s 32.18%, with net withdrawals rising despite mild weather—a development closely monitored by market participants. UK LNG send-out increased to 65 mcm/day by Friday, with higher nominations from both Isle of Grain and South Hook providing some supply relief amid the broader supply concerns.