Energy Market Update - 03 March 2025
Energy markets surged in response to escalating geopolitical uncertainty, with natural gas and power prices rising sharply. The collapse of US-Ukraine negotiations, concerns over European energy security, and potential shifts in global alliances have added to market instability.
European gas prices jumped this morning, with the TTF front-month contract reaching €47.00/MWh, up €4.00 from the previous settlement. The UK NBP front-month contract also climbed to 105p/therm, reflecting heightened risk across global energy markets.
Friday’s trading saw the TTF front-month settle at €44.32/MWh and NBP at 104.83p/therm, easing before the latest geopolitical shock. Norwegian gas flows remain steady at 331 mcm/day, while EU gas storage has declined further to 38.23%, down from 39.54%. LNG supply to the UK has been revised downward, with 12 cargoes expected over the next two weeks, compared to an earlier forecast of 14.
The energy market reacted sharply to the unexpected breakdown of talks between President Zelenskyy and US officials. The failure to secure a minerals deal has raised serious concerns about Washington’s long-term commitment to European energy security. With the US already scrutinising foreign aid and defence spending, questions are emerging over future support for NATO and transatlantic energy cooperation.
Meanwhile, reports of potential adjustments to Russian gas flows via Nord Stream 2 have intensified uncertainty. Any policy shift regarding Russian gas transit could further disrupt Europe’s supply strategy, forcing a reassessment of energy diversification efforts.
UK power prices followed gas market trends, with the front-month baseload contract settling lower at £86/MWh on Friday, down from £91/MWh. However, with rising gas prices, electricity markets could see upward pressure in the coming sessions.
Wind generation forecasts remain mixed, with output expected to peak at 7.5GW on Monday. This has kept day-ahead power prices in check. Meanwhile, European carbon markets softened, with EUA contracts slipping to €71/t from €73/t, and UK carbon allowances also weakening.
The broader European power market is closely monitoring the geopolitical landscape, particularly the fallout from US-Ukraine tensions and their potential impact on European defence and economic policies. If NATO funding faces cuts or US energy exports to Europe become politically contentious, the region may have to accelerate alternative supply strategies, adding further market volatility.
Brent crude traded near $73.18/bbl, slightly lower from $74.00/bbl last week. While geopolitical risks have escalated, global oil markets remain focused on demand signals from China, where recent economic data showed stronger-than-expected industrial activity.
European coal prices remain under pressure, with the API2 front-year contract hovering near $101.82/tonne, reflecting softer demand and easing gas-to-coal switching costs.
As markets brace for further developments, traders will closely watch Washington’s next steps on European security, potential realignments in global energy policy, and any fresh responses from Russia regarding its role in the European gas supply chain.