Market Report June 2026

Short-term power markets have remained well supported this month, but with heatwave conditions, volatile renewable generation and elevated gas prices pushing the day-ahead contract to its highest level since January. Looking ahead, developments in the Middle East are expected to remain the primary market driver, with the risk of renewed military escalation continuing to underpin the geopolitical premium across gas and power markets.

Conversely, any credible signs of de-escalation and a reduced threat to shipping through the Strait of Hormuz would trigger a sharp correction in prices, as the market would quickly refocus on the ongoing expansion of global LNG liquefaction capacity. Presently however, the US-Iran deadlock showed no signs of lifting, prompting cautious market behaviour and maintaining a sizeable risk element in forward pricing. Norwegian output continued to strengthen at the start of June, offsetting concerns about upward revisions to short-term demand forecasts and a modest increase in average wind speeds across last week helped to ease demand for relatively expensive gas-fired generation.

European aggregated gas storage levels currently stand at 41.03%, tracking 8.19% below last year’s levels and 18.27% below the 5-year average. Based on historical 5-year average injection rates from current levels, storage inventories are projected to reach approximately 72.00% fullness by 1st October.

IN OTHER NEWS:

The next phase of Ofgem’s green power storage scheme is coming – The UK’s renewables story is increasingly about storage, not just generation. Recent progress on the long-duration electricity storage scheme shows how batteries and pumped hydro can help capture surplus wind power and return it to the grid when demand peaks or the wind drops. That matters for energy security, because better storage reduces reliance on imported gas and helps smooth out price volatility. With Ofgem advancing dozens of projects, the UK is taking a practical step toward a cleaner, more resilient power system, one where wind can do more of the heavy lifting, even when conditions are variable.

Ofgem told to approve £4.5bn of extra spend on transmission – National Grid says the money is needed to invest in the network over the next five years and has asked Ofgem to approve around £4.5bn of new investment across the electricity transmission network in England and Wales. These costs will likely be added and passed through end users on top of the huge increases already seen since April.

UK grid operator Neso will cap interconnector trading with France, Denmark, the Netherlands and Belgium at a total of 1.5GW until the end of the year, with each cable subject to a 300MW limit. The decision comes after requests to reverse power flows to balance the UK grid disrupted neighbouring markets.

Drivers spending £18 more for a full tank – Survey finds nearly half of motorists are driving less and many are cutting everyday spending to cope with rising costs

Water and energy policies key to AI growth – A new report has warned that the UK’s ambitions to become a global artificial intelligence leader could be undermined unless sustainable water and energy policies are prioritised for data centres. It warns that poor planning around water efficiency and energy use could increase pressure on already stretched resources while slowing progress towards national sustainability goals.

The UK manufacturing PMI rose to 53.9 in May, its highest level in nearly four years, signalling an expansion in output. However, the improvement was largely driven by the front-loading of orders rather than by underlying demand.