Softer UK Energy Prices Open a Window for Buyers Before Risks Reprice

25th June 2026

Energy markets remain focused on future supply risks despite prices easing from the highs seen earlier this year. UK gas contracts have recovered from recent lows, with Winter 26 values finding support around 3.4p/kWh. While short-term fundamentals have improved, traders continue to monitor a combination of lower European storage levels, weather uncertainty linked to a potential El Niño event and ongoing geopolitical risks. Together, these factors are keeping upward pressure on forward markets and reinforcing the importance of managing procurement risk ahead of Winter 2026. 

Markets Recover from Recent Lows 

Forward gas contracts remain below the peak levels reached during March’s geopolitical volatility, but they continue to trade above pre-conflict levels. Winter 26, Summer 27, Winter 27, Summer 28 and Winter 28 products have all retraced from their highs, yet the market has not returned to pricing seen before tensions escalated earlier in the year. 

This suggests that traders continue to build a degree of risk premium into longer-dated contracts. While immediate supply conditions have stabilised, the market remains highly sensitive to any threat that could tighten supply or increase competition for LNG cargoes. 

For businesses purchasing energy, this means current pricing still reflects a market that is preparing for potential disruption rather than one that is fully confident in future supply security, despite apparentprogress made in US-Iran negotiations. 

Lessons From 2022 Remain Relevant 

During the 2022 crisis, the first major move came in March as UK gas prices reacted to the Russian invasion of Ukraine. However, the larger repricing came later, when Europe’s physical supply position tightened and the market had to price the risk of getting through winter with reduced flexibility. 

By August, the pressures on energy markets were no longer just geopolitical. French nuclear availability was constrained, river levels were low and coal accessibility was reduced. Those factors limited Europe’s ability to substitute away from gas, increasing the pressure on an already fragile system. 

That is the commercial lesson for Winter 26. Prices may ease when headlines improve, but the bigger risk for buyers is a later repricing if storage refill targets are missed, LNG competition intensifies or weather disrupts demand and supply. Waiting keeps budgets exposed to a winter premium that may return before procurement teams have acted. 

Low Storage Levels Create Additional Pressure 

One of the most closely watched fundamentals remains European gas storage. 

Current storage levels sit at around 42%, compared with a five-year average of approximately 62%. This leaves Europe with a larger refill challenge during the remainder of the injection season. 

Lower inventories increase Europe’s dependence on LNG imports and reduce the system’s ability to absorb unexpected shocks. Any disruption to supply or increase in demand could have a greater impact on prices than would typically be expected. 

For Summer 26 and Winter 26 contracts, traders are particularly focused on storage refill progress. If refill targets begin to look difficult to achieve, additional risk premiums could emerge across the forward curve. The same concern extends into Summer 27 and Winter 27 should inventories remain below normal levels after the coming winter. 

Several factors could complicate the refill process, including unplanned Norwegian outages, stronger Asian LNG demand during heatwaves, US LNG export disruptions, low wind generation, European heatwaves, Nordic hydro shortages and French nuclear constraints. 

Many of these events have occurred repeatedly over recent summers. With lower storage levels acting as a reduced buffer, their impact on pricing could be amplified. 

Weather Risk Moves Back Into Focus 

Weather forecasts are also attracting increased attention. 

Current projections indicate an 82% probability of El Niño development during Summer 2026, with some forecasting models suggesting the event could strengthen into a “Super El Niño”. If realised, it would rank among the strongest events observed in recent decades. 

While the most significant market impacts are expected to emerge later, traders are already considering how weather-driven demand patterns could affect global energy markets. 

Traders are likely to focus increasingly on weather-related risk as forecasts develop through the second half of 2026. Any strengthening of El Niño expectations could begin influencing forward contracts ahead of Winter 26, with the potential for broader market impacts extending well into Summer 27. 

Although weather forecasting remains inherently uncertain, the possibility of a strong El Niño event adds another layer of upside risk for forward energy prices. 

Geopolitics Still Matters 

Developments in the US-Iran war remain another important factor for global energy markets. 

A reduction in tensions could bring prices lower in the short term, with some scenarios suggesting markets could fall significantly on positive headlines. However, traders remain conscious that physical disruptions to LNG supply chains, shipping routes and insurance markets often take considerably longer to resolve than political disputes. 

As a result, even if geopolitical conditions improve, underlying supply concerns may continue to support prices for an extended period. 

Traders’ View 

Current forward prices already reflect many of the market’s positive assumptions, including stable LNG exports, normal short-term weather patterns and additional supply availability. 

The balance of risk appears increasingly weighted towards events that could push prices higher rather than materially lower. Low storage levels, potential weather disruption and ongoing geopolitical uncertainty all have the potential to increase volatility as Winter 26 approaches. 

For businesses seeking budget certainty, the current forward curve continues to offer an opportunity to secure pricing before these risks become more prominent in market valuations. 

If you would like to discuss current market conditions, contract timing or procurement strategy, contact NGP’s trading desk at [email protected] for live market guidance and support.