Europe’s energy prices hold firm: Mild weather and robust gas supply deflate winter premiums

• European gas and power prices have stabilised
• EU carbon prices remain stable, highlighting ongoing decarbonisation pressures

European energy markets registerd a price correction on expectations of a warmer week, and as supplies resumed from Norway following unplanned outages at Hansteen and Dvalin fields. The key European benchmark, the TTF gas Q1 2026 contract, fell 2.6% to €30.85/MWh, while the German power equivalent dropped 1.5% to €100/MWh.

The ongoing cold snap is expected to end by the weekend, and temperature forecasts for the following week have been revised upwards. Norwegian gas flows to the EU increased to 325 mcm/day, and unplanned outages at the Hansteen and Dvalin fields were resolved. While EU gas storage is at 81.68% (8 percentage points lower than last year), the market is confident of robust supplies through the winter.

Coal and Carbon Diverge

In a telling sign, the coal market is moving in tandem with gas, with the DES ARA price softening. However, the EU Carbon (EUA) price remains stable at €80.60/t, as funds have increased their net long positions to 102 mt. This indicates that while short-term energy price volatility is weather-dependent, the long-term regulatory pressure to decarbonize remains firmly in place and is a dominant financial bet.

Outlook

The market has swiftly shifted from a fear-driven premium to a more neutral/negative stance. Energy prices are likely to remain subdued, testing the lower boundaries of their expected winter range in the absence of a prolonged, severe cold spell.