Energy markets started 2026 with ample supply, as gas flows and LNG imports increased across Europe. Electricity demand remains strong despite slower renewable growth, keeping the market active. Short-term pressures are shaping prices, but long term outlooks remain stable.
Week of 5th January 2026
Gas and electricity markets opened the year with generally high supply levels, though analysts flagged that increased LNG exports and rising demand for heating could create short-term price swings. Renewable growth slowed slightly, but electricity demand continued to support the renewable market.
Week of 12th January 2026
UK prompt gas prices rose early in the week as the system balanced, supported by wind and CCGT generation, while European futures climbed due to colder weather forecasts and geopolitical tensions with Iran. Midweek, prices fell slightly as warmer forecasts emerged, though LNG supply interruptions in Texas and low EU storage kept markets tight. By the end of the week, European gas saw one of its largest weekly rises in over two years, driven by Siberian cold air, low storage, and geopolitical uncertainty.
Week of 19th January 2026
Short-term gas and electricity prices jumped due to cold weather, low wind, low storage, speculative buying, and ongoing geopolitical risks. Analysts noted this spike was temporary, reflecting winter volatility rather than structural supply shortages. Longer-term contracts remained significantly cheaper, particularly for gas, while electricity savings were more muted due to non-energy costs.
Week of 26th January 2026
The UK moved to extend the Sizewell B nuclear plant’s lifespan by 20 years to help bridge the gap before new plants come online. In Europe, renewables are reducing gas demand, with wind and solar generation surpassing fossil fuels for the first time. However, EU storage levels remain low and Ukraine continues to face sustained Russian attacks on energy infrastructure, keeping short-term price pressure high. Positive shifts in market sentiment, including improved UK consumer confidence and the removal of US tariff threats, also supported energy markets.
Conclusion
January 2026 saw energy markets shaped by a combination of seasonal weather, short-term market positioning, and geopolitical tensions. While short-term prices spiked due to winter demand and low storage, longer-term contracts offered more stable pricing. Careful timing and contract review remain essential to managing energy costs in this volatile environment.
For further insights and information on the dynamic landscape of the 2026 energy market, feel free to contact us:
01738474630
theteam@herestheplan.co.uk
