After an early-September surge, UK gas has given back much of the previous fortnight’s rally over the last week. The October 26 contract traded at 183p/th by the morning of Wednesday 23rd September, up 1p/th on the previous close but 7.6% below the level at the time of our last update. Q4 26 is at 186p/th and Winter 26 at 185p/th, down 7.5% and 8.4% on the week. Winter 26 fell as far as 184p/th on Monday 21st September, its lowest since Friday 4th September, and the front month’s 16p/th drop that day was its largest one-day fall since 8th April. Even after that correction, gas and power prices remain close to four-year highs and the market is steeply backwardated, indicating participants expect a looser supply and demand balance beyond the end of Winter 26 / Summer 27.
Power forwards have followed gas down, with the October contract closing at £144/MWh on Tuesday 22nd September and Winter 26 at £148/MWh, 5.9% and 8.6% lower than a week ago. Monday 21st September brought the sharpest one-day fall in the power front month since 8th April, matching the move in gas. Day-ahead power has swung violently in response to huge swings in wind output, collapsing to a three-month low of £31/MWh on Friday 18th September as output peaked near 15GW, then surging to an 18-month high of £194/MWh on Monday as wind generation plunged. It has since eased back to £150/MWh as generation builds again through the week. Brent crude slipped below $100/bbl during Tuesday 22nd September’s session and stands at $99/bbl at time of writing, 8.3% lower than a week ago. Europe’s key gas benchmark, the TTF, is at €73/MWh against €80/MWh a week earlier and €84/MWh at the war’s peak on Monday 14th September.
Tuesday 22nd September saw huge intraday volatility, with the front month swing through a 12p/th range, trading as low as 170p/th before recovering to 182p/th. This volatility followed a report in Kyodo News, also carried by Reuters, in which unnamed Iranian officials said Tehran had privately proposed reopening the Strait within seven days if Washington eased military pressure and lifted its blockade of Iranian ports. Iran’s semi-official Fars News Agency rejected the reports within hours as “unreliable and inaccurate,” saying they were intended to “lower oil prices.” In a subsequent address to the UN General Assembly, US President Donald Trump said he faced “a big decision,” namely whether “a deal be made with Iran that lets them rebuild” or whether “I annihilate the Islamic Republic, and do it quickly.” Despite Mr Trump’s belligerent commentary, Qatar is working to revive talks, with mediators shuttling between the two capitals. However, Tehran’s conditions remain unchanged: an end to the fighting, the release of frozen funds and an end to the US naval blockade.
Shipping through the Strait of Hormuz remains at a fraction of pre-war normal levels, with a dozen commodity vessels transiting over the weekend against 35 the previous weekend and roughly 130 a day before the war. Attacks on vessels continue; a tanker was struck by an unknown projectile on an inbound transit on Monday 21st September, injuring two crew, with no party claiming responsibility. Amid the disruption, the reappearance of the Qatari cargoes on Thursday 17th September was the first hard evidence of LNG movement in weeks, albeit the vessels had been previously already loaded, rather than forming part of any resumption of loading programmes.
Weak Asian buying remains one of the few reliably bearish forces in the market, with September LNG imports across the region estimated at 20.09 million tonnes, the weakest September since 2018. Every cargo Northeast Asian buyers decline at these prices is one that can be attracted towards Europe, and LSEG analysts report customers in China, Japan and Turkey offering reloads or spot sales. To set this demand destruction in the context of pricing; the Asian benchmark, the Platts JKM, sits at $27/MMBtu, against the $30/MMBtu level at which Goldman Sachs expects Indian industrial buyers to begin shutting down demand.
Back in Europe, EU aggregate gas storage crossed the 70% mark on Tuesday 22nd September, reaching 70.14%, still the lowest on record for the time of year and around 17 percentage points below the ten-year average. Germany and the Netherlands remain well adrift at 56.99% and 55.96%, with German fullness the lowest for the time of year since records began. In terms of pipeline flows, Wednesday 23rd September marks the peak of planned maintenance on the Norwegian continental shelf, with 67.6mcm/d of Kårstø’s capacity unavailable alongside outages at Åsgard and Skarv and an unplanned Troll compressor failure of 46.2mcm/d. From Thursday 24th, export capacity begins returning and flows ramp up into the winter. On the speculative side, investment funds hold net length of 191.3TWh on the TTF, with gross longs cut by 11.0TWh on the week and gross shorts by 7.4TWh, leaving the net just 3.6TWh lower. With a week to go until the start of the Winter 26 delivery window, funds remain positioned to benefit from expected future gains in price.
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