Carbon Slumps to Multi-Month Lows as Political Pressure Weighs on EU ETS

Gas Market

NBP near-curve prices strengthened on Thursday, with the front-month contract gaining 2.09p to settle at 77.23p/therm, recovering part of the heavy losses seen earlier in the week. Support came from ongoing concerns over low European storage levels, which currently stand at 35.21% full, only 1.59% above the five-year low recorded in winter 2021/22. Additional support came from supply-side uncertainty after unplanned maintenance at Sleipner curtailed Norwegian flows. While operations are currently expected to resume tomorrow, uncertainty remains, and revised Norwegian maintenance schedules later this month continue to keep market participants cautious over near-term supply availability. Colder temperature forecasts for next week also lent support to prompt pricing, with the day-ahead contract rising 3.30p to settle at 81.30p/therm.

Power Market

GB power prices were mixed, with far-curve contracts pressured by weakness in carbon markets while prompt prices tracked stronger gas. Summer-26 fell 52p to £67.45/MWh, reflecting softer carbon prices across the curve. In contrast, near-term contracts moved higher, with the front-month contract settling 42p up at £75.25/MWh. The day-ahead contract rose £2.45, or 3%, to £84.2/MWh as firmer gas prices offset broadly stable wind generation expectations. Carbon prices remained under pressure from political developments, sustaining strong bearish momentum. The Dec-26 contract slid sharply through the session, settling 7.5% lower at €72.54/tonne, reaching levels last seen in September 2025. The move followed comments from the German Chancellor suggesting a possible postponement of elements of the EU carbon market, as policymakers respond to mounting pressure from industry to ease compliance costs.

Oil Market

Oil prices fell on Thursday as easing concerns over renewed Middle East conflict, softer demand expectations, and rising supply projections weighed on sentiment. Front-month Brent settled at $67.52/bbl, down $1.88 or 2.71% on the day, reversing the week’s earlier gains. Pressure followed the International Energy Agency’s latest monthly report, which lowered its demand growth outlook while projecting a sizeable surplus in 2026, with supply expected to exceed demand by 3.73 million barrels per day, reinforcing expectations of comfortable future supply. Additional downside came from U.S. data showing crude inventories rose by 8.5 million barrels last week to 428.8 million barrels, far exceeding expectations of a 793,000 increase and signalling more comfortable near-term supply conditions. Despite the pullback, prices remain around 14% higher since the start of the year, supported by ongoing U.S.–Iran tensions.

Markets this morning

Energy markets are softer this morning, with gas prices easing after yesterday’s weather-driven strength. NBP near-curve contracts are down around 1.38p/therm on average as the UK system is expected to loosen day-ahead, driven by a 27mcm/d, or 33%, drop in gas-for-power demand amid stronger wind output and stable LNG send-out. Carbon prices initially rebounded following yesterday’s heavy losses but have since moved lower again, with the Dec-26 EUA contract last trading €1.11 below yesterday’s close at €71.42/tonne. Oil prices have edged higher, with the Apr-26 Brent contract up 27c at $67.67/bbl, supported by reports that President Trump plans to roll back some tariffs on steel and aluminium, improving the economic outlook.