Heatwave and LNG ease gas; carbon props up power
Gas dropped 5.7% to 113.94p/therm this week as record UK heat and improving global LNG supply eased near-term tightness, though it remains 6.1% higher over 30 days. Power fell just 1.1% to £101.04/MWh, held up by rising carbon allowances despite strong renewables, and is still 10.8% up on the month.
Gas fell 5.7% this week but remains up 6.1% over 30 days; power dropped 1.1% but is up 10.8% over the month — both still elevated, easing but not cheap enough yet to lock in unless you're renewing very soon.
What Happened This Week
Gas prices fell sharply this week as an exceptional heatwave gripped the UK and continental Europe, with the UK recording its hottest May day on record at 34.8°C. The heat slashed heating demand and collapsed gas-fired generation, whilst improving global LNG supply—Australian strikes postponed, US export capacity ramping up, and four cargoes arriving in the UK—eased the supply tightness that had been supporting prices. By Friday, unconfirmed reports of a US-Iran ceasefire extension and Strait of Hormuz reopening further reduced geopolitical risk, allowing gas to settle around 116p/therm as June expired and handed to July.
Power prices proved more resilient, falling only 1.1% despite gas weakness, because rising EU carbon allowances (up €1/tonne to €76.90) decoupled power from gas direction. Strong renewable generation—German solar alone hit 20GW early in the week—added downward pressure, but carbon costs and the offline Hartlepool nuclear reactor (620MW unavailable until 2 June) provided support. Brent crude oil climbed early in the week on US military action against Iran but retreated as ceasefire hopes grew, though the geopolitical backdrop remains tense but stable.
Over 30 days, gas is still up 6.1% and power up 10.8%, meaning this week's easing is a relief from a higher base, not a return to cheap levels. The forward curve shows summer 2027 gas at 85.09p and power at £77.76—a meaningful drop from current levels—but near-term contracts (Q4-26 gas at 117.95p, Q4-26 power at £103.16) remain elevated. For anyone renewing in the next 6 months, this week's dip is welcome but prices are still historically high; those with 12–18 months to run should watch how the curve evolves as summer demand fades and storage builds.
What Moved the Market
Where Prices Are Right Now
Wholesale rates at week-end close. Your business rate will be higher.
| Contract | Price | Week | 30d |
|---|---|---|---|
| Jun-26 | 113.94p | -5.7% | +6.1% |
| Jul-26 | 113.43p | -5.5% | +6.8% |
| Aug-26 | 113.80p | -5.4% | N/A |
| Q3-26 | 114.01p | -5.4% | N/A |
| Q4-26 | 117.95p | -4.6% | N/A |
| Q1-27 | 115.08p | -4.4% | N/A |
| Win-26 | 116.53p | -4.5% | +5.6% |
| Sum-27 | 85.09p | -1.1% | -0.3% |
| Win-27 | 86.30p | -0.2% | -0.2% |
| Sum-28 | 65.08p | +1.4% | -1.0% |
| Cal-27 | 92.67p | -2.0% | +1.2% |
| Cal-28 | 71.97p | +1.2% | -0.4% |
| Cal-29 | 64.39p | +1.2% | -1.1% |
| Contract | Price | Week | 30d |
|---|---|---|---|
| Jun-26 | £101.04 | -1.1% | +10.8% |
| Jul-26 | £100.43 | -1.3% | +10.1% |
| Aug-26 | £97.72 | -1.4% | N/A |
| Q3-26 | £99.46 | -1.4% | N/A |
| Q4-26 | £103.16 | -0.5% | N/A |
| Q1-27 | £100.95 | -0.3% | N/A |
| Win-26 | £102.06 | -0.4% | +7.6% |
| Sum-27 | £77.76 | +2.9% | +3.9% |
| Win-27 | £79.49 | +1.2% | +0.6% |
| Cal-27 | £83.98 | +1.5% | +3.8% |
| Cal-28 | £67.87 | +2.2% | -0.3% |
| Cal-29 | £65.11 | +1.6% | -1.2% |
What To Do About Your Contract
Gas has eased 5.7% this week and is showing genuine downward momentum, but remains 6.1% up over 30 days—still elevated. Power fell only 1.1% and is 10.8% up on the month. If you can wait another 2–4 weeks to see if the heatwave effect and LNG supply gains persist, you may lock in lower prices; if you need to renew now, the trend is at least moving in your favour.
Cal-27 gas is at 92.67p (up 1.2% over 30 days) and Cal-27 power at £83.98 (up 3.8% over 30 days)—both stable but not falling sharply. This week's near-term easing is informational; what you'll pay in 12–18 months depends far more on summer demand, storage builds, and winter supply outlook. No need to rush; monitor the curve over the next month as storage levels and weather patterns become clearer.
Cal-28 gas at 71.97p and Cal-29 at 64.39p show the market expects a meaningful drop by 2028–29. This week's moves are noise at this horizon (Cal-28 up just 1.2%, Cal-29 up 1.2%). You have time; wait for clearer signals on long-term supply and demand before acting.
📈 For energy buyers — forward curve shape + look-ahead
Forward curve shape: The curve is in contango—future prices are cheaper than today—with summer 2027 gas at 85.09p (down 25% from current 113.94p) and power at £77.76 (down 23% from £101.04). This signals the market expects near-term tightness to ease as demand falls and storage builds, but it also means locking in now at current levels is expensive relative to waiting.
Look ahead: Watch for the Oseberg return on 30 May (26 million cubic metres/day) and Troll's return on 1 June—if these hit delays, near-term gas support could return. Wind forecasts show a trough on Monday–Tuesday next week before recovery; a sharp wind drop could lift power prices and reduce renewable support. The US-Iran ceasefire talks remain fluid; any escalation would reverse this week's geopolitical relief and push crude and gas higher. German storage at 30% of capacity is tracking well, so no imminent supply crisis, but monitor for any sign that the heatwave breaks earlier than expected.
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Source: ICE Endex / SEFE daily reports · Smart Energy Company — Independent energy broker since 2014
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