El Niño: Good News and Bad News, at the Same Time
El Niño: Good News and Bad News, at the Same Time
El Niño is pulling energy markets in two directions, increasing global gas demand while potentially bringing a milder UK winter.
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ENERGY CONSULTANCY OF THE YEAR
Publish Date:
October 1, 2026
Key Market Drivers & Fundamentals
El Niño: Good News and Bad News, at the Same Time
You may have heard El Niño mentioned in the news this year, it’s a natural weather pattern, and 2026’s version is one of the strongest ever recorded. It’s genuinely pulling energy prices in two different directions at once, and it’s worth understanding both sides.
THE BAD NEWS (GLOBAL)
El Niño is drying up hydropower dams across Asia, so countries like China and India are buying much more gas on the open market to make up for the shortfall, and burning more coal too. That extra demand competes for the same LNG cargoes Europe is relying on, adding a bit more upward pressure to prices everywhere, including here.
THE GOOD NEWS (FOR THE UK SPECIFICALLY)
For Britain’s own weather, the same El Niño pattern is currently pointing toward a milder-than-average winter, forecasters put the odds at around 55-65% for above-average temperatures, especially in the south-east. A milder winter means less heating demand, which is one of the few things currently working in consumers' favour.
THE CATCH
Don’t read “milder winter” as “calm winter.” These strong El Niño years also tend to bring more storms, forecasters expect a busier than usual storm season between November and January, and can still produce a sharp, short cold snap even in an otherwise mild season. This could help with increased wind & hydro power generation. So it’s a genuine tailwind, just not a guarantee of an easy ride.
Energy Market Report Q4 2026
How Can Advantage Help?
Our sustainability department continue offer an ever-increasing range of products and technology aimed at reducing energy consumption and associated costs as well as driving down carbon emissions. We will of course continue to keep you updated around these initiatives, but please do reach out to your designated point of contact should you wish to explore your options in this regard.
In terms of procurement, we will of course continue to monitor markets with a view to helping customers navigate the unprecedented circumstances and ascertain when constitutes the best time to seek a contract extension.
Our popular flexible procurement options continue to be an option for an increasing number of clients on either a standalone basis or as part of a grouped basket. This often facilitates access to day/month ahead trading markets which have proved to be particularly beneficial to many clients over the winter period.
BULLISH IN Q4
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IRAN WAR AND GEOPOLITICAL FALLOUT
COMPETITION FOR LNG (GEOPOLITICS & EL NIÑO)
LOW EUROPEAN STORAGE
POLITICAL & ECONOMIC INSTABILITY AND UNCERTAINTY
RUSSIA/UKRAINE WAR
RISING CARBON
RANGEBOUND IN Q3
OCTOBER BUDGET
VOLITILITY & UNCERTAINTY
ANY FURTHER NORWEGIAN UNPLANNED OUTAGES
RE-OPENING STRAIT OF HORMUZ
MIDTERMS AND AFTER-EFFECT
BEARISH IN Q3
MILD LEANING UK WINTER
HEALTHY WINTER ELECTRICITY SYSTEM
WHOLESALE FUTURES PRICES, 28 & BEYOND
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