Market Outlook
In the second quarter, most commodities proved to be sensitive, reacting simultaneously to geopolitical events, fears of shortages and fundamental factors such as the weather. The gas market was the most influential in setting prices. Nevertheless, commodities are no longer reacting as strongly as they did at the outset of the wars and unrest in the Middle East.
June 2026
In the second quarter of 2026, the European energy market is proving to be a sensitive system: electricity, gas, coal and CO₂ are all reacting simultaneously to geopolitical turbulence, structural changes and political intervention. Consequently, rather than a stable price picture, we are seeing a combination of short-term volatility and long-term restructuring.
This is particularly evident in the electricity market. Here, gas – in combination with weather effects – remains the key price driver. Low storage levels and persistent geopolitical risks are fuelling a latent risk premium. At the same time, the increasing feed-in of renewable energy, particularly solar, regularly leads to sharp price falls, even down to negative prices. The market is thus increasingly pricing in a future with growing renewable energy capacity and declining gas dependency – coupled with lower average prices and higher volatility. The front-month electricity contract is currently trading at 95.55 EUR/MWh, around 4 euros above the level at the start of the quarter.
The gas market continues to act as the key barometer. The TTF Forward 2027 contract has fallen by around €2.6/MWh since 1 April, whilst the spot market is trading around €2 below the level seen at the end of Q1. Earlier signs of easing due to higher LNG availability were overshadowed by geopolitical events – the escalation in the Middle East and the blockade of the Strait of Hormuz led to serious concerns regarding global LNG flows. The result was rising prices, higher volatility and the return of risk premiums, which, however, eased somewhat over the course of the quarter.
This confirms that the European gas market is an integral part of a global system. Replacing Russian pipeline imports with LNG increases costs and shifts dependencies. Furthermore, new influencing factors such as strikes are gaining in significance, for example at LNG facilities.
By contrast, the coal market remains in the background. In the short term, it primarily exerts an influence through substitution effects when gas prices are high. Structurally, however, coal continues to lose importance, driven by rising CO₂ prices, regulatory requirements and a lack of investment. In the second quarter, coal acts more as a backup than as an active price driver and trades at around USD 127/tonne (API2), close to the level at the start of the quarter.
In the market for emission allowances, there is a tension between fundamentals and political steering. Short-term movements are primarily determined by market psychology and political signals, whilst the structural trend remains unchanged: a falling cap, rising regulatory ambitions and a growing scarcity market. European Union Allowances (EUA) 2026 rose by around EUR 5 per tonne in the second quarter to approximately EUR 79 per tonne.
Outlook
Overall, the markets remain on edge due to the ongoing conflicts in Ukraine, Iran and Lebanon. However, the impact of escalating rhetoric on prices is waning: provocative tweets or inflammatory statements no longer trigger sharp price spikes, as was recently the case. Instead, concrete, fundamental effects are becoming increasingly apparent, particularly with regard to oil production, for example in the event of attacks on infrastructure in Russia or Ukraine, or a blockade of the Strait of Hormuz. This could lead to renewed price spikes if current reserves and stock levels are no longer able to offset the shortfall in oil supplies on the market.
Support for energy trading
From online access to the relevant OTC or exchange trading platforms to daily energy market news: find out more on our website or feel free to contact us on 040 668 780 400.