Energy Market Update - 05 March 2025
Energy markets remained volatile, with natural gas prices falling due to geopolitical developments and milder weather forecasts. Power prices softened as strong renewable generation and declining carbon prices added downward pressure.
European gas markets saw a brief sell-off before stabilising at previous closing levels. The TTF front-month contract settled at €43.46/MWh, down from €45.21/MWh, while NBP front-month fell to 103.57p/therm from 107.16p/therm. Warmer-than-expected weather forecasts contributed to lower demand, with UK temperatures projected to stay 1°C above seasonal norms until mid-April. Norway’s gas flows remained steady at 331mcm/day, and EU gas storage levels fell to 37.63%, continuing a downward trend. LNG arrivals in the UK are expected to total 10 cargoes in the coming weeks, down from 12 previously.
Market sentiment was also influenced by political developments in Washington. President Trump confirmed receiving a letter from President Zelenskyy stating Ukraine’s readiness to negotiate a minerals deal and potentially accelerate peace talks. This signalled a possible end to the war but also raised concerns about the terms of a settlement. Meanwhile, speculation over the potential use of Nord Stream 2 was denied by Germany, despite reports that it had been approved for maintenance later this year.
UK power prices declined in line with falling gas prices and stronger renewable output. The front-month UK baseload contract traded at £85/MWh, down from £88/MWh, while the front-season contract dropped to £82/MWh from £84/MWh. Spot prices also saw a sharp decline, with UK day-ahead baseload at £81/MWh, down from £96/MWh.
Wind generation in the UK has remained strong, reaching 10.8GW, which has reduced gas-fired power demand. France’s nuclear output reached its highest February levels since 2020, reinforcing its position as a net exporter of electricity. A falling European carbon market also contributed to lower power prices, with EUA prices dropping to €69/t from €72/t.
Brent crude oil edged lower to $71.04/bbl from $72/bbl amid concerns over US tariffs impacting global trade and potential demand slowdown. Coal prices for 2026 delivery fell to $103.58/tonne from $104.84/tonne. Meanwhile, Henry Hub natural gas prices rose to $4.35/MMBtu from $4.12/MMBtu, and JKM LNG prices declined slightly to $13.83/MMBtu from $13.97/MMBtu.
Market participants are closely monitoring developments in Washington and Kyiv, as the geopolitical landscape continues to shape energy market sentiment. Further downside pressure may arise if peace talks progress swiftly, leading to a potential reduction in geopolitical risk premiums.