On a week-on-week basis, there is little difference in pricing on 29th July and the prior Wednesday, 22nd July. Gas for delivery during August 26 trades near a four-month high at 149p/th, near parity with the Winter 26 strip, also trading at 149p/th. Power forwards are similarly elevated, with power for delivery during August 26 again well above £120/MWh at £123/MWh, and Winter 26 power at £125. However, the week-on-week position obscures significant intra-week volatility, as gas and power market participants attempt to digest another cycle of escalation and de-escalation in the Middle East.
13 consecutive nights of strikes on Iranian targets by the US resulted in UK gas and power prices hitting highs not seen since the immediate wake of the Iranian strikes on Ras Laffan. However, there was no 14th night of strikes; the weekend of 25th & 26th July passed almost without incident, with the US and Iran seemingly moving into a new ceasefire phase. A weekend without strikes saw gas prices drop by up to 9% on Monday 27th, followed by another bearish day on Tuesday 28th.
The bearish movement was cut short on Wednesday, as another round of strikes was exchanged between the US and Iran. In a statement, US Central Command “Islamic Revolutionary Guard Corps forces launched multiple ballistic missiles from Iran in an attempted surprise attack on U.S. forces based in the Middle East. All Iranian missiles were successfully intercepted. U.S. forces remain vigilant and at a high state of readiness.” Iran’s IRGC has claimed air attacks on a US airbase in Jordan, and Jordan’s army claims air defences shot down five Iranian missiles launched towards its territory. The IRGC also claims to have struck and stopped three tankers in the Strait of Hormuz.
European aggregate gas storage fullness has now reached 55.9%, with the continent likely to begin Winter 26/27 with stocks on 1st November at their lowest level since 2012 or 2013. Gas demand destruction has become a permanent feature of European markets since the shock of 2022, with absolute demand never returning to pre-2022 levels, thanks to a range of factors including electrification, efficiency measures, on-site generation and shuttering of production. However, the fact remains that low gas storage volumes still present a potential source of volatility heading into Winter 26.
Investment funds have increased their net long positions on Europe’s key gas benchmark, the TTF, to an eight-week high amid sustained bullishness. The latest Commitment of Traders report indicates funds hold a net long position of 265TWh, a result of both increased long and reduced shorts. This is the largest net long position since the 27th May COT report, and indicates hedge fund bulls expect prices to rise still further.
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