European gas and power markets made a dramatic step higher yesterday after Ukraine successfully attacked Russian gas condensate plants in the Arctic. EU gas in storage has reached only 67% full and when the heating season starts in only a few weeks’ time it is likely to be a record low for the time of year. The market was already under growing pressure from the realisation that Qatari supplies are unlikely to resume until well into the winter, if not into next year. So, the Ukrainian strike has raised fresh concerns. It is not completely clear, yet, what damage has been done, but it is possible that supplies from the Russian Yamal LNG facility will be affected and this would deal a fresh blow to the global gas supply outlook.
Winter UK gas prices briefly broke 200 p/therm and the winter baseload contract settled not far below 160 £/MWh. Prices have been rising along the curve. This time last year, the market was anticipating an oversupply in LNG in 2026 making it the year when prices of gas and power finally fell back to something more like the pre-Ukraine crisis range. When the US/Iran war started though, the year when prices were expected to transition lower was pushed out to 2027. Now, the forward curve is saying it will be 2028. Indeed, the summer of 2029 is now the closest seasonal contract that is priced under 70 p/them (it settled at 66.66 p/therm yesterday.)
The worry is not just about this specific strike. Its is about the range (2,000 miles), precision and what more Ukraine will be able to do. As the frontline on the ground in Eastern Ukraine remains in deadlock is it quite probable that the two countries will spend the winter blowing up one another’s energy infrastructure: each trying to freeze the other side into submission.
Though rather eclipsed by the move in gas, Brent crude has broken 100 \$/b and came within a whisker of its August high of 102 \$/b, but gasoil (diesel) broke 200 \$/b. Overall, the scene is set for a challenging winter…
| Commoditiy | Front contract (£p/therm) | Winter 26/27 (£p/therm) | Summer 27 (£p/therm) | Winter 27/28 (£p/therm) |
|---|---|---|---|---|
| Price | 197.67 | 198.06 | 130.97 | 125.09 |
| Weekly Change | 15.52 | 15.60 | 9.46 | 7.09 |
| Commoditiy | Front contract (£/MWh) | Winter 26/27 (£/MWh) | Summer 27 (£/MWh) | Winter 27/28 (£/MWh) |
|---|---|---|---|---|
| Price | 152.00 | 158.61 | 103.92 | 105.47 |
| Weekly Change | 10.44 | 11.33 | 4.36 | 5.25 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 2.81 | 101.21 | 85.04 | 61.05 |
| Weekly Change | -0.15 | 5.58 | 1.49 | 1.87 |
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