Winter 2026 Energy Market Update: Key Risks and What to Watch

Moving through Winter 2026 into the Spring months, energy markets face a mix of shifting weather risks, supply dynamics, and policy developments. 

During this update, we’ve highlighted the key market movements, what to watch out for as we continue the Winter months, and what it could mean for your energy strategy. 

Watch the full video below or scroll down for the key takeaways.

Market Overview

After the price declines we saw through Summer 2025, that softer trend carried into the first half of winter. Gas and power prices across the forward curve - from summer 2026 through to winter 2028 - fell by around 14% for gas and just over 3% for power.

But despite those overall declines, volatility hasn’t gone away. Prices have been moving quickly, and direction has largely been driven by a few key factors - milder weather early in the winter reducing demand, strong and consistent supply from Norway and record levels of global Liquefied Natural Gas (LNG) exports helping to keep the market well supplied

That said, since the turn of the year, things have shifted. We’ve seen colder weather push demand higher than the five-year average, carbon prices have hit record levels, and geopolitics once again move firmly back into focus.

All of that has flattened the forward curve, meaning the market has gone from a clear backwardation to a much tighter structure - and that’s something we’re watching closely to see what effect that will have on the markets.

Weather

Winter started on a fairly mild note, with temperatures through the end of 2025 at, or slightly above, seasonal norms. That helped push prices down to their lowest levels since 2022.

However, early 2026 marked a clear change. An Arctic blast swept across Europe, bringing sub-zero temperatures and putting pressure back on supply, which quickly fed through into higher prices.

Looking ahead though, longer-range forecasts suggest colder conditions could persist into February. With storage already being drawn down at a decent pace, any prolonged cold spell could tighten the market further and keep upside risk firmly on the table.

On the wider weather picture, the La Niña weather cycle that sees cooler than normal sea temperatures is starting to weaken but is still expected to influence conditions in the near term, meaning we’re likely to see ongoing variability and the chance of further cold spells through late winter and early spring.

Further into 2026, a shift toward El Niño is expected, which typically brings milder and more stable conditions for the UK and Europe. That should reduce the risk of sustained cold, although short-term volatility and occasional extremes can’t be ruled out.

Storage

Recent colder weather has driven strong gas withdrawals across Europe, running at around 190-million cubic metres per day above the five-year average. That’s happened despite LNG send-out remaining strong, sitting around 11% above three-year averages.

What’s interesting is that prices haven’t reacted as aggressively as they might have in previous years. That reflects a looser global gas market and growing confidence in LNG supply, particularly with more capacity expected to come online this year.

That said, risk hasn’t disappeared. In mid-January, we saw the summer-winter spread invert for the first time since last June.

Simply put, winter prices are usually higher than summer prices because demand is higher in colder months. When that relationship flips - and summer prices move above winter - it’s a sign the market is starting to worry about how much gas we’ll need over the summer to refill storage.

With storage levels now moving towards the 50% mark, the market is pricing in the risk that more supply will be needed later in the year. If colder conditions continue, that refill risk, and the premium attached to it, could build further, but as ever, Trident will be keeping a keen eye on what happens. 

LNG

The LNG market has been particularly interesting this winter. During the final quarter of 2025, both Asian and European front-month prices closed around 14% lower, driven by weaker demand in Asia at a time when global LNG exports were hitting record levels.

In contrast, U.S. gas prices moved sharply higher - up around 55% - as colder weather boosted domestic demand, tightening balances just as feedgas demand was ramping up for LNG exports.

Through the first half of winter, around 37% of U.S. LNG exports were discharged into North-West Europe, with the U.S. now accounting for roughly 65% of Europe’s LNG supply. Russian LNG deliveries into North-West Europe remained broadly in line with last year, highlighting just how exposed Europe remains to U.S. supply as it looks to phase out Russian LNG by the end of 2026.

Since the start of 2026, the price spread between Asian and European benchmarks has narrowed, with Europe holding a slight premium. That’s kept arbitrage open for U.S. cargoes into Europe through to April.

More recently, falling U.S. prices - down nearly 30% - reflect uncertainty around new supply, with delays at key export facilities in the U.S., Australia and Canada adding another layer of complexity and therefore a degree of uncertainty around pricing levels, meaning a keen risk management strategy would be advisable.

Wider Energy Complex 

Oil

Last year, front-month Brent recorded its largest annual decline since 2020, falling around 19%. That was driven by higher production from the U.S., OPEC and other producers, alongside weaker demand in Europe and parts of Asia.

Looking ahead, forecasts suggest global supply growth will continue to outpace demand, but geopolitics remain a key source of volatility. Tensions involving Iran have supported recent price moves, while potential changes in U.S.–Venezuela relations could impact supply, longer term, although meaningful increases would require significant investment and time.

Alongside this, ongoing geopolitical and trade tensions between the U.S. and Europe have reintroduced uncertainty, which can quickly feed through into wider market volatility.

Carbon 

Carbon markets have also been a major story. Both EU and UK carbon prices hit record highs late last year, and that momentum has continued into 2026.

Prices have been supported by tighter supply, lower auction volumes, and a more restrictive emissions cap under the EU Green Deal. Wider policies, including carbon border measures, are also feeding into longer-term expectations of a tighter market.

Options positioning suggests the market is anticipating further price increases, which continues to provide underlying support, particularly as higher carbon prices increasingly influence power generation costs.

What this means for your energy strategy

While prices have stabilised somewhat in recent months, the mix of weather, LNG flows, storage levels, and geopolitics means volatility can return quickly.

If you’re on a flexible contract, a clear risk management strategy can help you take advantage of opportunities when they arise, while protecting your business from sudden price spikes.

And if you’ve got a fixed contract starting in 2026, now’s a good time to be engaging with the market. When volatility picks up, opportunities can disappear fast.

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If you’ve got questions or want help with your energy strategy, get in touch with our team.