30 July 2026

Weekly Energy Market Update 

Outlook

The heatwave across much of Europe has increased cooling demand while also reducing river levels and raising water temperatures, keeping nuclear modulation risk elevated. Curtailments have been observed in France, as well as in Hungary and Romania amid historically low Danube levels. Together with weak hydro and wind generation, this has supported spot power prices. Day-ahead baseload averaged £124.31/MWh in the UK and €110.52/MWh in Germany over the week. Looking ahead, temperatures are expected to ease only gradually, staying around 4°C above normal by next Tuesday. Forward markets remained volatile as geopolitical developments continued to dominate. A brief pullback in prices proved short-lived following renewed military action, reigniting concerns over the return of Qatari LNG supplies. Against the backdrop of Europe's low gas storage levels, ongoing geopolitical uncertainty is likely to continue underpinning gas and power prices.


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General Context
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UK shop price inflation slowed to 0.9% y/y in July, the weakest increase since December 2025, as widespread summer promotions and World Cup-related discounts weighed on retail prices. Food inflation eased to 2.2%, while non-food inflation slowed to just 0.2%.

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The Federal Reserve kept interest rates unchanged, as did the BoE in a widely expected decision, as policymakers weighed easing domestic inflation against the risk that renewed hostilities in the Middle East could push up energy prices and reignite inflationary pressures.

Oil

 

Oil prices have recovered from early-week lows amid renewed Middle East tensions and a tight physical market. However, despite the sharp geopolitical repricing, gains have remained limited as Gulf crude continues to find routes to consumers.

The latest EIA data points to a tighter-than-expected US crude market, with inventories falling to multi-year lows as refinery runs remain elevated. Combined with escalating Middle East tensions, the larger-than-expected draw has reinforced bullish sentiment and supported higher oil prices.
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Gas & Power
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Eni and TotalEnergies have taken a final investment decision to develop the Cronos gas field offshore Cyprus, with around 2 bcm/year of gas expected to be exported to Europe from 2028 via Egypt's existing LNG infrastructure. While the volumes are modest, the project supports Europe's longer-term supply diversification and could help re-establish Egypt as a structural LNG exporter.

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Water levels on the Rhine at Kaub are forecast to fall to around 24-25 cm by Friday, close to the record low reached in 2018, reducing barge cargoes and increasing freight costs for coal deliveries into Germany. However, utilities report holding ample coal stocks and retaining alternative transport options, limiting the immediate impact on power generation.

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France's nuclear output is expected to be reduced by up to 4.9 GW (around 8% of installed capacity) today as a renewed heatwave pushes temperatures towards 42°C, forcing EDF to curtail generation at several reactors due to high river temperatures and low water levels. The cuts, affecting plants including Saint-Alban, Chooz and Golfech, have provided further support to French prompt power prices.

Current Prices
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UK Gas (NBP) - Rolling 12-Month Average
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Sustainability Spotlight

Is Renewable Energy Under Pressure?

NESO (National Energy System Operators) plans and operates Great Britain’s entire energy grid, balancing supply and demand + steering the Net Zero transition. And they are losing control. NESO engineers warn they no longer have control of the electricity system as renewable generation, batteries, and local power sources expand beyond their ability to monitor these elements. Concerns emerged during the heatwave of June 23rd, when demand increased whilst renewable energy imports were under pressure. Ofgem has ordered two investigations into the operation of Britain’s electricity system.
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