Energy Market Developments May 2026

Energy markets split between record-low spot prices and geopolitical developments

Summary
In May, the energy markets remained highly dynamic. Geopolitical tensions, uncertainties surrounding LNG supply, and maintenance work on Norwegian gas infrastructure continued to drive significant movement across the gas and electricity markets. At the same time, exceptionally high solar power feed-in and fluctuating wind generation repeatedly led to significant price movements on the spot market, with electricity prices temporarily falling as low as -498.44 €/MWh on 1 May.

While futures markets were primarily supported by geopolitical risks, short-term markets reacted sensitively to weather developments, storage levels, and changes in international commodity trading. Developments around LNG, oil, and CO₂ certificates were particularly in focus among market participants. Below is a concise overview of the most important developments and key price drivers in the energy markets over the past few weeks.

In May, the electricity market remained volatile, influenced both by geopolitical developments and by fluctuations in renewable feed-in. Changeable weather conditions also contributed to this: a cool period around the “Ice Saints” was followed by an early heatwave toward the end of the month, with regionally midsummer-like temperatures of up to 34 °C. At the same time, May was characterized by exceptionally high sunshine duration. With around 254 hours of sunshine, the long-term average was exceeded by approximately 26%.

On 1 May, negative electricity prices on the spot markets reached a new extreme. On the EPEX Spot power exchange, all quarter-hour intervals between 1:30 p.m. and 2:30 p.m. traded at -499.99 €/MWh, reaching the market’s technically possible lower limit. As industrial electricity demand was low on the public holiday, a very high electricity supply met comparatively low consumption. In response, EPEX SPOT adjusted the price floor in the day-ahead market: the previous lower limit of -500 €/MWh was reduced to -600 €/MWh. The previous lower limit had originally been intended as a technical safety mechanism and not for regular use in market activity.

Toward the end of the month, this trend continued. Persistently high solar power feed-in pushed spot market prices significantly lower, particularly over the Pentecost weekend. Although the extreme values seen on 1 May were not reached again, day-ahead prices remained in negative territory for several trading hours.

Futures markets moved mostly sideways in May, with the Cal-27 product largely trading within a range of 90 to 93 €/MWh. Market participants recently assessed the geopolitical situation around the Strait of Hormuz somewhat more calmly and increasingly expected the situation to gradually ease in the coming months, uncertainty remains, however.

Scheduled maintenance work at several Norwegian gas fields and processing facilities temporarily reduced the gas supply available to Europe in May. As Norway is one of Europe’s most important gas suppliers, European gas markets reacted sensitively to the lower export volumes. Norwegian gas flows fell to around 254 million m³ per day in May, approximately 32 million m³ per day below the level recorded in April. Temporarily offline capacity was estimated at 85 to 90 million m³ per day, corresponding to around 25% of technical export capacity.

In addition, traders reported more intense competition with Asian buyers for available LNG deliveries. Robust demand from Asia coincided with limited global LNG supply, thereby supporting short-term gas prices in Europe in particular.

Against this backdrop, storage injections in May came in below expectations and are likely to total around 80 TWh. This corresponds to a shortfall of approximately 20 TWh compared with the same period last year. At the end of May, gas storage facilities in EU member states were around 40% full on aggregate. The storage deficit compared with the previous year widened over the course of the month from around 70 TWh to around 90 TWh.

On the futures market, easing signals from the United States recently led to declining prices. US President Donald Trump once again suggested that the conflict with Iran could soon come to an end and spoke of advanced negotiations. Reports that individual LNG and oil tankers were still able to pass through the Strait of Hormuz also had a price-dampening effect. On Friday, the navy of Iran’s Islamic Revolutionary Guard Corps (IRGC) announced that, despite the US blockade, a total of 24 ships, including tankers, container ships, and merchant vessels, had successfully passed through the Strait of Hormuz. Market participants interpreted this as a possible signal of a gradual normalization of LNG transport. At the same time, the situation remained tense, as LNG vessels often passed through the strait in so-called “dark mode”, with their AIS transponders switched off in order to conceal their position for security reasons.

New military developments toward the end of the month once again increased uncertainty. After the US stated that it had attacked Iranian missile positions as well as vessels used for mining the Strait of Hormuz, oil prices rose again in the short term. Accordingly, the gas market remains highly sensitive to geopolitical news. In May, the Cal-27 product mostly traded within a range of around 37 to 40 €/MWh, below the price level seen in April.

Oil

Oil prices declined significantly over the past month. For several days, the US and Iran have been negotiating an extension of the ceasefire in place since 8 April, as well as further talks aimed at resolving the conflict. Toward the end of the month, US media finally reported a preliminary agreement between negotiators from both countries. Among other things, the agreement provides for an extension of the ceasefire, the start of further negotiations on Iran’s nuclear program, and unrestricted shipping traffic through the Strait of Hormuz. The prospect of an easing geopolitical situation and more stable supply through one of the world’s most important oil and LNG transport routes had a price-dampening effect on energy markets. However, final approval of the proposed framework agreement by US President Donald Trump was still pending most recently.

Coal

Coal prices rose significantly in May, reaching USD 128.62 on 19 May, their highest level in six weeks. The main drivers were higher gas and oil prices as well as temporarily increased power plant demand. Prices declined again later in the month, as overall import demand remained subdued and risk premiums in the energy markets recently eased somewhat.

CO2

CO₂ prices also increased significantly in May compared with April. Market participants initially reacted to the ongoing uncertainty surrounding the reform of the European Emissions Trading System (EU ETS), as well as to developments in the energy and fuel markets. In addition, the amendment proposals published by the European Commission on 11 May triggered market discussion.

The Commission proposed updated benchmarks for the EU ETS for the period from 2026 to 2030, which are decisive for the level of free certificate allocation to European industry. According to the current proposals, industrial companies are to receive free certificates for an average of around 75% of their emissions in the future. In the period from 2021 to 2025, this share was still around 85%. At the same time, the European Commission aims to create incentives for industrial electrification and to maintain the coverage of indirect emissions from electricity consumption across several product benchmarks. The financial impact of the proposed adjustments is estimated at around €4 billion for the period from 2026 to 2030.